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ISSN 0972-1983 09 CHARTERED SECRETARY R The Council [ Registered under Trade Marks Act, 1999 ] President Nesar Ahmad Vol. : XLII No. 9 Pp 1073-1232 September - 2012 Vice President S. N. Ananthasubramanian From the Members Anil Murarka 1084 (in alphabetical order) Ardhendu Sen President Arun Balakrishnan Ashok Kumar Pareek Atul Hasmukhrai Mehta Legal From the Atul Mittal 1148 1156 B. Narasimhan (LW-97-104) World (GN-185-214) Government Gopalakrishna Hegde 1186 News from the 1231 Our Harish Kumar Vaid Institute Members Pradeep Kumar Mittal Renuka Kumar (Ms.) ARTICLES ( A 338-397 ) Revathy Iyer (Ms.) Arbitrability of Disputes Relating to Oppression and Mismanagement 1088 Sanjay Grover Arbitrability of Disputes Relating to Oppression and Mismanagement 1093 Sridharan R Arbitrability of Disputes Relating to Oppression and Mismanagement 1100 Sudhir Babu C Arbitrability of Disputes Relating to Oppression and Mismanagement - Revisiting the Legal Provisions1 1106 U D Choubey (Dr.) Judicial View : Demystifying Arbitration in Disputes of Oppression Umesh Harjivandas Ved and Mismanagement 1115 Vikas Yashwant Khare Arbitrability of Disputes Relating to Oppression & Mismanagement 1119 Cases of Oppression and Mismanagement - A close look at Secretary & the jurisdiction of CLB vis-à-vis an Arbitral Tribunal 1127 Chief Executive Officer N. K. Jain Arbitrability of Disputes Relating to Oppression and Mismanagement 1134 Arbitrability of Disputes Relating to Oppression and Mismanagement 1138

Editorial Advisory Board Arbitrability of Disputes Relating to Oppression and Mismanagement 1144 Annual Subscription Chairman Justice D. R. Deshmukh Inland : Rs. 1000 (Rs. 500 for Students of the ICSI) Foreign : $100; £60 (surface mail) Single Copy : Rs. 100 Members Chartered Secretary is normally published in the first week of every (in alphabetical order) D.P. Dash month. Non-receipt of any issue should be notified within that month. Articles on subjects of interest to company secretaries are welcome. G.R. Bhatia Views expressed by contributors are their own and the Institute does Girish Ahuja (Dr.) not accept any responsibility. The Institute is not in any way Harish K. Vaid responsible for the result of any action taken on the basis of the advertisement published in the journal. All rights reserved. No part K S Chalapati Rao (Prof.) of the journal may be reproduced or copied in any form by any means Nawal Kishor (Prof.) without the written permission of the Institute. The write ups of this Om Prakash Dani issue are also available on the website of the Institute. Pavan Kumar Vijay Edited, Printed & Published by R.S. Nigam (Prof.) N. K. Jain for The Institute of Company Secretaries of India, Renu Budhiraja (Ms.) ICSI House , 22, Institutional Area, Lodi Road, New Delhi- 110 003. Phones : 41504444, 45341000, Grams : COMPSEC Sanjeev Kumar (Dr.) Fax : 91-11-24626727 T V Narayanaswamy E-Mail : [email protected] Vinod K. Singhania (Dr.) Website : http://www.icsi.edu Design & Printed at Editor & Publisher N. K. Jain M. P. Printers B-220, Phase II, Noida-201305 Consulting Editor V. Gopalan Gautam Budh Nagar, U. P. - India

Legal Correspondent T. K. A. Padmanabhan September 1073 CHARTERED SECRETARY 2012 ICSI-SEP2012-9P1.qxd 9/5/2012 11:22 AM Page 4

IMAGES

Conferment of IOD Distinguished Fellowship - 01 Nesar Ahmad (President, The ICSI) receiving the IOD Distinguished Fellowship from Dr. M. Veerappa Moily (Hon'ble Minister of Corporate Affairs & Power) in the presence of Lt. Gen. J.S. Ahluwalia, PVSM (Retd.) (President, Institute of Directors).

Meeting with DG, EPZ Authority Dar es Salaam, 02 Tanzania - Standing from Left: Umesh H. Ved(Central Council Member, the ICSI), Dr.A. Meru (DG, EPZ Authority, Dar es Salaam), Gandence Cassian Kayombo (Hon'ble Member of Parliament, Govt. of Tanzania) and Nesar Ahmad.

16th ICPSK Annual International Conference on 03 Governance Perspectives in Harnessing Natural 01 Resources for Development held at Kwale County, Kenya. Group photo of dignitaries and delegates with Dalmas Otieno (Hon'ble Public Service Minister, Govt. of Kenya, sitting 8th from left, first row).

Second ICSI Corporate Governance Week on 04 Good Governance for Sustainability - Programme held at Bangalore - Release of ICSI Publication titled Role of Company Secretary in Corporate Governance - Standing from Left:GopalakrishnaHegde, G. M. Ganapathi, Justice M.N. Venkatachaliah( former Chief Justice of India), S.N.Ananthasubramanian, S.S.Marthi and C. Dwarkanath.

Programme Held at Hyderabad - Sitting on 05 the dais from Left: VasudevaRaoDevaki,Shujath Bin Ali,C. Sudhir Babu,ThotaNarasimham (Hon'ble Minister for Stamps & Registration, Govt. of Andhra Pradesh),S.N. Ananthasubramanian,Neerabh Kumar Prasad (IAS, Commissioner, Hyderabad Metro Development Authority) and S. S. Marthi.

Programme held at Mumbai - Release of ICSI 06 Publication titled Responsibly Managing e- waste - Standing from Left: MahavirLunawat, 02 Chitra Ramakrishna (Jt. Managing Director, NSE), S.N. Ananthasubramanian, Rajeev Agarwal (Whole Time Member, SEBI) and B. Narasimhan.

Programme held at Kolkata - Inauguration - 07 Chief Guest AmleshBandopadhyay {Member (Technical), CLB, Kolkata} lighting the lamp. Others standing from Left: S. Gangopadhyay, B.P. Dhanuka, Ranjeet Kanodia, Deepak Khaitan and Anjan Kr. Roy.

Programme held at New Delhi - Release of ICSI 08 Publication titled Sustainability Reporting for Sustainable Future -Standing from Left: N.K.Jain, U. Venkataraman(CEO, Currency Derivatives Segment and Whole Time Director, MCX Stock Exchange), Nesar Ahmad, Dr.M. Veerappa Moily (Hon'ble Union Minister of Corporate Affairs & Power), Sunil Kant Munjal (Jt.MD, Hero MotoCorp.Ltd.),P.K. Mittal and Rajiv Bajaj.

A view of the dignitaries, invitees and 09 delegates. 03 September 2012 CHARTERED SECRETARY 1074 ICSI-SEP2012-9P1.qxd 9/5/2012 11:22 AM Page 5

2nd ICSI Corporate Governance Week Aug. 27-31, 2012

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IMAGES

Meeting of ICSI 10 delegation with Governor of Madhya Pradesh - Ram Naresh Yadav (Hon'ble Governor of Madhya Pradesh interacting with ICSI delegation - From Left: PiyushBindal, Vivek Nayak, Amit Kumar Jain and Dhanraj Singh Thakur. 10

Signing of MOU with NSE 11 of India Ltd. - Standing from Left: K. Hari (Vice President, NSE), K.C. Kaushik, Sonia Baijal, Banu Dandona, Jay Kumar (Asst. VP, NSE), Dr. J. Ravichandran (Director, NSE), S.N. Ananthasubramanian, B. Narasimhan, Atul H. Mehta, Mahavir Lunawat and Prakash K. Pandya. 11

NIRC - Meeting with 12 Corporate Mentors of NIRC - Group Photo of members together with Nesar Ahmad, N. K.Jain, Pavan Kumar Vijay, Rajiv Bajaj, Deepak Kukreja, Ranjeet Pandey, Vineet K Chaudhary, Yogesh Gupta and G. P. Madaan. 12

SIRC - Madurai Chapter 13 - One Day Seminar jointly with ICAI ( Cost Accountants) on Revised Schedule VI & XBRL and CARR and CARO - From Left: Dr. I. Asok, S. Kumararajan, B.T.Bangera (MD, Hi- tech Arai (P) Ltd, Madurai), S.Saraskumar and S. Paramasivan. 13 September 2012 CHARTERED SECRETARY1076 ICSI-SEP2012-9P1.qxd 9/5/2012 11:22 AM Page 7

September 1077CHARTERED SECRETARY 2012 ICSI-SEP2012-9P1.qxd 9/5/2012 11:22 AM Page 8

At a Glance

line, these aspects take a back seat and the parties who have Articles (A 338 - 397) p- 1088 toiled together for years, may be decades - being together in ups and downs - part ways - bitterly. What is it that makes partners Arbitrability of Disputes Relating to turn their back towards each other - what is that turns them into p- 1088 Oppression and Mismanagement bitter foes?This article tries to deal with the unwritten and extra- legal aspects of arbitration qua oppression and mismanagement. B.C. Thiruvengadam It also throws light on the possible ways to avoid prolonged his article distinguishes between contractual rights and litigation in the courts of law and instead go for amicable T statutory rights of a member of a company. The statutory settlement. rights are further classified and the importance of qualified minority rights of a member are discussed. It also discusses application of Arbitrability of Disputes Relating to these rights under Sections 397 and 398 of the Companies Act, Oppression and Mismanagement - p- 1106 1956 and non-application of it in a winding-up petition under just and equitable grounds. It also highlights that a proceeding under Revisiting the Legal Provisions oppression and mismanagement is a proceeding in rem and powers under Section 402 of the Companies Act, 1956 cannot be T K A Padmanabhan exercised by an arbitrator. According to the author, a statutory right he Company Law Board cannot refer the dispute involving cannot be waived as the same is coupled with a legal duty. While T oppression and mismanagement under sections 397 and highlighting the importance to thwart any attempt to oust the 398 of the Companies Act to an arbitrator for adjudication. The jurisdiction of Company Law Board in a petition for oppression and disputing parties themselves, who satisfy the eligibility criteria mismanagement, the author suggests as to how the Company Law under section 399, also cannot settle the dispute involving issues Board should handle situations where petitions are filed for of oppression and mismanagement under sections 397 and 398 oppression and mismanagement to circumvent an arbitration of the Companies Act through arbitration. However, it appears agreement. that a disputing party who does not satisfy the eligibility criteria under section 399, can settle the dispute involving issues of Arbitrability of Disputes Relating to oppression and mismanagement under sections 397 and 398 of p- 1093 the Companies Act by filing a suit before an ordinary civil court of Oppression and Mismanagement appropriate jurisdiction. Even in such circumstances also the dispute cannot be settled by an arbitrator because he cannot V. Durga Rao provide the reliefs as specified under section 402 of the othing prevents the shareholders to get their disputes with Companies Act. N the majority settled through arbitration mechanism, but, the Arbitrator deciding such a dispute can not be seen as a Presiding Judicial View : Demystifying Officer exercising power under section 397/398 and the final order p- 1115 of the Arbitrator can not be equated with a finding of CLB in an Arbitration in Disputes of application under section 397/398 of the Companies Act, 1956. Oppression and Mismanagement The shareholders defending the petition under section 397/398 of the Companies Act, 1956 can prefer an application under section Aishwarya Singh 8 of the Arbitration & Conciliation Act, 1956 seeking a reference his article is an attempt to demystify arbitrability of disputes based on the facts if they believe that the disputes raised are T on oppression and mismanagement. While few such covered by an arbitration arrangement. It is for the CLB to take a disputes are referred by Company Law Board (CLB) for view as to whether the disputes can be settled by an Arbitrator and arbitration, others are adjudicated by CLB itself. In absence of it's the discretion of CLB based on facts of that particular case. clear cut law explaining the basis of rejection or acceptance of plea of arbitration by CLB, there is constant uncertainty regarding Arbitrability of Disputes Relating to fate of such plea. In fact, this ambiguity is also not even p- 1100 satisfactorily resolved by legal provisions in India. Both, the Oppression and Mismanagement Companies Act, 1956 as well as Arbitration Act, 1996 justify their respective prevalence. However, they fail to address the solution Mahesh A. Athavale & Anagha Anasingaraju on occurrence of conflict between the aforementioned wo or more persons come together to start a business on legislations. Nevertheless, when faced with a tussle between T the foundation of mutual faith, trust, joint efforts, hard work, concerned provisions of the two legislations, judiciary has taken sharing of responsibilities and success. Somewhere down the the responsibility of providing clarity on the issue of jurisdiction. Through this article, an in-depth analysis of the judicial view has been conducted. In order to further appreciate judiciary's binding September 2012 CHARTERED SECRETARY1078 ICSI-SEP2012-9P1.qxd 9/5/2012 11:22 AM Page 9

At a Glance

opinion, a model which brings out the clear position on this decide the competency & qualification of the arbitrator to ensure pertinent legal issue has also been proposed. that order of the arbitrator will be free from bias and lack of relevant knowledge? Also some legislation such as the Arbitrability of Disputes Relating to Companies Act, 1956 have specifically given powers to the p- 1119 Company Law Board to decide violations of rights identified & Oppression & Mismanagement secured under the Act. Therefore, arbitration cannot be resorted to as a uniform practice even if the provisions of the Arbitration Pramod S Shah & Conciliation Act 1996 are satisfied. Only a highly competent roceedings under sections 397 and 398 of the Companies "Arbitration authority" can reduce the gap between matters not P Act, 1956 are not outside the purview of Sections 8 and 45 serious enough in public policy to be easily referred for of the Arbitration and Conciliation Act, 1996. Once the CLB is arbitration & matters serious in nature & possibly affecting the convinced that the issues raised in a petition under section right in rem and hence cannot be allowed to be decided by the 397/398 relate to or arise out of or is in connection with an ordinarily appointed arbitrator. A professionally qualified arbitration agreement and the relief appropriate to the facts of individual like a Company Secretary can perform not just as an the case could be determined/granted by an arbitrator, then, the arbitrator but also represent before any statutory authority like CLB is bound to refer the matter to arbitration in terms of the the Company Law Board. mandatory provisions of the section 8 or 45 of the Arbitration Act provided the agreement is not null and void, inoperative or Arbitrability of Disputes Relating to incapable of being performed. If any of the requirements of p- 1138 section 8 or 45 is not satisfied then CLB can decline to refer the Oppression and Mismanagement dispute to arbitration. Naresh Kumar he author critically examines the relevant provisions of the Cases of Oppression and T Arbitration and Conciliation Act, 1996, (Act) and p- 1127 Companies Act, 1956, regarding arbitrability of disputes relating Mismanagement - A close look to oppression and mismanagement. The conclusion is that the at the jurisdiction of CLB parties can include an arbitration clause in the contract to settle vis-à-vis an Arbitral Tribunal all differences and disputes arising between the parties out of or relating to their contract by arbitration in accordance with the law Dr.K.S. Ravichandran and procedure of their choice. However, the CLB alone is ere existence of an Arbitration Agreement cannot oust the vested with statutory powers to deal with the cases of M jurisdiction conferred upon and the enormous powers of oppression and mismanagement. The parties cannot enforce Company Law Board (CLB). Certain reliefs capable of being their contractual rights through a petition before the CLB styling granted by CLB under Sections 402 and 403 of the Act cannot their disputes as acts of oppression and mismanagement. be granted by an Arbitral Tribunal. Unless the subject matter of the dispute and the parties are common, the proceedings before Arbitrability of Disputes Relating to CLB cannot be stalled by making applications under Section 8 p- 1144 or 45 of Arbitration and Conciliation Act. Merely if certain Oppression and Mismanagement parties, who are not necessary parties, are added to a company Rajendra Sawant petition under Sections 397 and 398, CLB is not powerless to bject of arbitration is settlement of dispute in an refer the parties to Arbitration if proper and timely applications O expeditious, convenient, inexpensive and private manner are made under appropriate provisions of the Arbitration and so that they do not become the subject of future litigation Conciliation Act. between the parties. The Arbitration and Conciliation Act, 1996 confers powers on the judicial authority to refer dispute to arbitration in respect of which the parties have entered into an Arbitrability of Disputes Relating to p- Oppression and Mismanagement 1134 arbitration agreement. The Company Law Board is a designated forum for dealing with Pronamika Bhattacharya the disputes arising among the shareholders inter se or between he alternative dispute resolution mechanism, particularly the company and shareholders including those relating to T resolution by arbitration of disputes is undoubtedly an oppression and mismanagement. The issue being discussed in effective way of reducing litigation and consequently the burden this Article is whether powers conferred on CLB under Chapter of the Courts of India. In view of the increasing foreign VI of Companies Act, 1956 to deal with dispute relating to investment coming into India, resolving disputes by means of oppression and mismanagement under Sections 397 and 398 arbitration can help evade the long judicial processes enhancing can be ousted by an arbitration agreement. investor confidence. But the biggest drawback is that - who will September 1079 CHARTERED SECRETARY 2012 ICSI-SEP2012-9P1.qxd 9/5/2012 11:22 AM Page 10

At a Glance

effects of Changes in Foreign Exchange Rates" Legal World (LW 97 - 104) p- 1148 u Applicability of Service Tax on commission payable to Non- Whole Time Directors of a company under section 309(4) of u LW.78.09.2012 Delhi High Court upholds the CLB order the Companies Act, 1956 - approval of Central Government allowing interest on non refunded deposit. under section 309/310 of the Companies Act - regarding. u LW.79.09.2012 In the case of amalgamation, the transferee u Company Law Settlement Scheme, (Jammu & Kashmir) 2012 company can change its name as part of the scheme without u Imposing fees on certain e-forms filed with ROC, RD or following other provisions.[Del] MCA(HQ) under MCA-21 where at present no fee is prescribed u LW.80.09.2012 Bombay High Court rejects the objection u Filling of Balance Sheet and Profit and Loss Account by based on tax avoidance ground and sanctions the scheme of companies in NonXBRL for accounting year commencing on or amalgamation. after 1.04.2011 u LW.81.09.2012 When the company secures the disputed debt u Imposing fees on certain e-forms filed with ROC, RD or involved in a winding up petition, the creditor becomes a MCA(HQ) under MCA-21 where at present no fee is secured creditor and winding up petition cannot be prescribed. maintained.[Cal] u Redemption of Indian Depository Receipts (IDRs) into u LW.82.09.2012 Court's order sanctioning amalgamation Underlying Equity Shares cannot be modified to include what has not been included in u Facility for a Basic Services Demat Account (BSDA) the sanctioned scheme.[Del] u Rationalization of process relating to surrender of registration u LW.83.09.2012 Supreme Court cancels the sentence imposed by sub-brokers on the drawer of cheque.[SC] u The Securities and Exchange Board of India(Issue of Capital u LW.84.09.2012 In case of shipment on high seas, the policy and Disclosure Requirements) (Third Amendment) Regulations, provided the extension of concession if the validity period 2012. lapsed when the shipment had landed at any Indian port and u Filing Offer Documents under SEBI (Issue of Capital and in the present case the goods had reached in the port of India Disclosure Requirements)Regulations, 2009 after the date of expiry of the authorization, the rejection of u Establishment of Local Office of the Board at Bengaluru revalidation could not be faulted.[Del] u Establishment of Local Office of the Board at Jaipur u LW.85.09.2012 In light of the decisions in Pratap Narain Singh u Redressal of investor grievances against listed companies in Deo and Valsala it is not open to contend that the payment of SEBI Complaints Redress System (SCORES). compensation would fall due only after the Commissioner's u Manner of Dealing with Audit Reports filed by Listed companies order or with reference to the date on which the claim u Aadhaar Letter as Proof of Address for Know Your Client application is made.[SC] (KYC) norms. u LW.86.09.2012 As far as the direction given to the u Business Responsibility Reports management to pay to the respondent-workman wages from u Direct Market Access - Clarification January, 2006 till 9-11-96 is concerned the same appears to u Activation of ISIN in case of additional issue of shares/ be a typing mistake and actually the wages were intended to securities be given from 1/11/2006 onwards and that mistake is uSystem for Making Application to Public issue of Debt Securities corrected here.[Del] u Review of the Foreign Direct Investment policy - permitting u LW.87.09.2012 In view of clear enunciation of the settled investments from Pakistan. principles, the writ petition could not have been dismissed merely because there was non-compliance of an order passed under Section 17B of the said Act.[Del] Other Highlights p- 1186 u Members Admitted/ Restored From the Government (GN 185 - 214) p- 1156 u Certificate of Practice Issued/Cancelled u Gazette notification GSR 534(E) dated 14/07/2011- clarification u Licentiate ICSI Admitted regarding. u News From the Regions u Amendment to Notification Number G.S.R. 501(E) dated 6th u Company Secretaries Benevolent Fund July, 1999 u Our Members u Product or Activity Groups for Cost Audit Report and u Appointment Advertisements Compliance Report to be filed with the Central Government u Prize Query u Companies (Central Government's) General Rules and Forms u Memoranda of understanding (Fifth Amendment) Rules, 2012 u u Company Law Board (Second Amendment) Regulations, 2012 Application for restoration of Membership u u The Company Law Board (Fees on Application and Petitions) Application for the issue/renewal/restoration (Amendment) Rules, 2012 of certificate of practice u Constitution of a Committee for Reforming the Regulatory u Three days Workshop on"Risk, Regulation and Environment for doing Business in India. Compliance" (With special focus on Banking) u Clarification on Para 46A of notification number G.S.R. 914(E) u 40th National Convention of Company Secretaries dated 29.12.2011 on Accounting Standard 11 relating to "The u Online Services available to Members u September Guidelines for Identifying Star/Icon Members of the Institute 2012 CHARTERED SECRETARY1080 ICSI-SEP2012-9P1.qxd 9/5/2012 11:22 AM Page 11

Appointment

The Institute of Company Secretaries of India (ICSI) is a statutory body enacted by the Parliament under the Company Secretaries Act, 1980 to regulate and develop the profession of Company Secretaries in India. The ICSI has on its roll over 30000 members and over 3,25,000 students. The Institute is governed by the Council of the Institute, responsible for the management of the affairs of the Institute and for discharging the functions under the Company Secretaries Act, 1980. The ICSI has its Headquarters at New Delhi, four Regional offices in Chennai, Kolkata, Mumbai and New Delhi and Chapter offices in 68 cities across the country. It has 122 Examination centers across the country including an overseas centre at Dubai.

ICSI is on the lookout for an accomplished person to fill the position of Secretary Qualification and Experience: Should be a fellow Member of the ICSI, preferably with legal background and experience of a minimum 15 years in a senior position in administration, finance, secretarial and legal in government, autonomous/statutory body or medium to large public / private sector company. The eligible candidates, who were earlier called for interview in June, 2012 may also be considered.

Job contents: The incumbent as 'Secretary' will be required to perform the functions of the Secretary of the Institute and will assist the Council in advising and framing the policies and shall discharge such duties as given in the Company Secretaries Act, 1980 and the Company Secretaries Regulations, 1982 as also those assigned to him from time to time by the Council. The person selected should be able to take the profession to a higher level and enhance the role of the Institute in Indian industry. The candidate should have suitable experience and must also have the ability to communicate effectively to interact with senior level officers in the Government departments, Regulatory bodies, Industry / Trade Associations, Chambers of Commerce and Professional bodies, etc.

The incumbent should be adaptive in nature, having impeccable personal and professional ethics, integrity and professional competence, strong ability of reaching out to people across the globe for the cause of the profession of the Company Secretaries and the Institute. The incumbent is expected to exhibit exemplary leadership qualities, administrative acumen, objectivity in analysis and good interpersonal relationships within and outside the Institute. Should be strong in building good working relationships and trust with others; strong presentation skills and the ability to envision and innovative thinking. It is also expected that the incumbent will stay abreast of all relevant changes in the environment so as to enhance the quality of advice to the Council and performance of the Institute.

Age: Should be between 40 and 55 years of age as on 1st January, 2013.

Compensation: Basic pay Rs. 90,000/- per month plus HRA, DA, Performance Incentive, Insurance, medical, staff car etc. (CTC Rs. 35 Lakhs approx. per annum). However, the compensation will not be a constraint for a deserving candidate.

Period of engagement: The tenure for the position is for five years on contractual basis with an option for renewal upto a period which shall not exceed the date of superannuation. Either party may give three months' notice for termination of the contract.

How to apply: Eligible candidates applying for the position should email their profile/resume to [email protected]. Candidates who have applied for this position earlier need not apply again if there are no significant changes in their experience/qualifications.

Candidates employed in ICSI (internal candidates) may also be considered subject to fulfillment of the conditions. The Core- Group/Interview Board constituted for the purpose reserves the right to reject the name of any candidate at any stage without assigning any reason whatsoever. The right to consider the candidature of others identified through professional search process is reserved.

The last date of submission of the resume/profile is 21st September, 2012.

This advertisement is in supersession of the earlier advertisement published in the month of March, 2012 for this position at ICSI.

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Latest From Corporate Governance C 1. The Norwegian Code of Practice for Corporate Governance - The Code of Practice for Corporate Governance is issued by the Norwegian Corporate Government Board (NCGB) which is empowered to consider a revised version of the Code of Practice each year. NCGB takes into account international changes for the purpose. The Code of Practice is principally intended for companies whose shares are listed on Oslo Børs or Oslo Axess, stock exchanges in G Norway. The Code also applies to savings banks with listed equity certificates to the extent that it is appropriate. The current edition of the Code of Practice was issued on 21 October 2010, replacing the edition of 21 October 2009. In 2011 NCGB communicated only few minor changes and adjustments to the Code of Practice by means of a separate document. & In 2012, NCGB invites all interested parties to provide any comments they may have on the Code, on the appropriate issues. The most substantial of the proposals relate to: l More detailed explanation of the 'comply or explain' principle. l The justification for the nomination committee's recommendations. C l The content and public disclosure of transaction agreements entered into in connection with takeovers. Continuing development of the Code, NCGB invites interested parties to put forward their views, comments and proposals, not only in response to the proposed issues but also in general latest by 1 September 2012. Members willing to give comment on the Code may send feedback via email at [email protected]. Comment may also be sent to S [email protected]. The Code and proposed issues for comments are available at: http://www.nues.no/ R 2. Business Roundtable (BRT) Principles of Corporate Governance -- June 27, 2012: BRT is an association of Chief Executive Officers of leading U.S. companies with over $6 trillion in annual revenues and more than 14 million employees. BRT member companies comprise nearly a third of the total value of the U.S. stock market and invest more than $150 billion annually in research and development - nearly half of all private R&D spending in U.S. Our companies pay $163 billion in dividends to shareholders and generate an estimated $420 billion in sales for small and medium-sized businesses annually. BRT companies give : nearly $9 billion a year in combined charitable contributions. The BRT principles for corporate governance were last issued in 2010. The latest issue reflects the new provisions of Dodd-Frank Wall Street Reform and Consumer Protection Act implementation and the continuing evolution of best practices. The principles are of importance to present U.S. economy for employment and economic growth. W BRT's new Principles of Corporate Governance includes important updates in five key areas: Independent Leadership BRT endorses the appointment of a lead director where a board combines the positions of CEO and chairman or has a chairman who is not independent. BRT also recommends that the board evaluate its leadership structure annually. A Whistleblower Provisions and Compliance Oversight BRT recommends that companies establish procedures for handling reports of all types of misconduct, including violations of law and the company's code of conduct. Company audit committees should meet at least annually with the person who has day-to-day responsibility for a company's compliance program. T Risk Oversight BRT highlights the important role of board of directors in risk oversight, emphasizing the link between strategy and risk and the need for a risk oversight structure that enables a board to understand the company's major risks, how they relate to the company's strategy, and what the company is doing to manage these risks. C Shareholder Communication and Engagement BRT emphasizes the importance of communication with shareholders and considering the views of shareholders. BRT also notes that, although companies should consider shareholder views, the board has a duty to act in the best interests of the company and all its shareholders. H Political Activities BRT recommends that, at companies engaged in political activities, the board of directors should have oversight responsibility and consider whether to adopt a policy on disclosure of these activities. The details can be accessed at: http://businessroundtable.org/

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GREEN CORNER Green Healthy Day Green initiatives in every day life will lead to healthy life. 1. Start your day by a brisk walk on green grass or exercise naturally without using electrical machinery. 2. Avoid using shower instead use a bucket 3. Choose petroleum-free cosmetic products 4. Use solar charger for laptops to mobiles. Save energy always. 5. Structure your office building to complement natural light. 6. Avoid paper wastage, recycle paper waste 7. Eat green and healty food 8. Walk or bicycle shorter distances. 9. Avoid carrying polythene bags from vendors and hawkers. 10. Ensure unplugging all the electrical appliances. Good Things Around Electroshakti Impex Pvt. Ltd. has introduced commercial electric tricycles for the masses, based in India. Electroshakti pioneers in fuel-free, environment friendly Electric Vehicles (EV's). Electroshakti's product range includes variety of EV Tricycles that cater to a wide variety of requirements across the market segment. From golf course to ferrying passengers, EVs are now a part of Delhi's Landscape. Remember 8 September - International Literacy Day 21 September- International Day of Peace 10 September- World Suicide Prevention Day 29 September- World Heart Day 15 September- International Day of Democracy 16 September- International Day for the Preservation of the Ozone Layer Moments of Thought "We have to generate trust by displaying the corporate governance"

Rajiv Kr. Agarwal ( Whole Time Director- SEBI)

FORTHCOMING EVENTS International Conference on Public Policy and Governance - 2012 4-6 September, 2012 Venue:- J N Tata Auditorium, Bangalore, India

8th CII Corporate Governance Summit Sep 18, 2012 Venue: Vivanta - Taj President, Ballroom, Cuffee Parade, Mumbai, Maharashtra, India

FEEDBACK & SUGGESTIONS Readers may give their feedback and suggestions on this page to Mrs. Alka Kapoor, Joint Director, ICSI ([email protected])

Disclaimer: The contents under ‘CG & CSR: Watch’ have been collated from different sources. Readers are advised to cross check from original sources.

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From the President

professionalism through truly professional attitude. Corporate Governance Policy The second meeting of the Committee constituted by the Ministry of Corporate Affairs to formulate a policy document on Corporate Governance was held on August 22, 2012 at Mumbai. The Committee decided to submit a set of recommended Guiding Principles of Corporate Governance to the Government. I shall keep you informed on the developments. PMQ Course in Corporate Restructuring and Insolvency The concept of insolvency practitioners is gaining prominence in India in the context of revival, rehabilitation and winding up of companies. The Companies Bill, 2011 proposes a larger role for professionals like Company Secretaries in the process of revival, rehabilitation and winding up of companies. Professionalism is knowing Interim Administrator, to be appointed from panel of professionals including Company Secretaries, has how to do it, when to do it, been assigned vital role to play in the revival and and doing it. rehabilitation of companies. Similarly, the Provisional Frank Tyger Liquidator or Company Liquidator to be appointed from the panel of professionals including Company Secretaries has to play a critical role in winding up Dear Professional Colleagues, process. These regulatory prescriptions will open new areas of practice for Company Secretaries. ecoming a professional is an attitude adjustment process that begins with I informed you in my earlier communication, The understanding and appreciating what it Company Secretaries (Amendment) Regulations 2012 B means to be a professional, creating a notified on 4th June 2012, provide for Post Membership personal vision of professionalism, and Qualification (PMQ) Course in Corporate Restructuring aligning one's values with that vision. and Insolvency. This PMQ Course aims at capacity building of Professionals in the area of legal, practical Professionalism indeed is an essential component of and application oriented aspects of corporate long term professional success. Truly, the restructuring, rescue and insolvency and matters Professionals in today's dynamic environment are related thereto. required to speed up the knowledge updation, assimilate and articulate the same to respond to I am pleased to inform you that the Institute proposes expectations of stakeholders. They have to develop a to launch the PMQ Course in Corporate Restructuring right attitude to ensure that the services are rendered and Insolvency at the 40th National Convention of in a professional manner, adhering to the professional Company Secretaries. This PMQ course will have standards and the tenets of professionalism. written examination as well as compulsory workshop for case studies. The overly competitive world, witnessing overlap in the services being rendered by various professions is now ICSI Certificate Course in valuation driven by the quality of service, the speed of service, True and transparent business valuation is an the cost effectiveness of the service and more so the important instrument of good corporate governance. value derived by the service seeker from the service The area of valuation is perceived to be limited to provider. To flourish as a true professional in such a corporate valuation like valuation of shares, enterprise demanding environment, we must recognize the need wide valuation etc. However, the scope of Valuation for change. We need to initiate and enhance extends to co-operative organization, Income tax September department, Municipal Corporation, Asset or Business 2012 CHARTERED SECRETARY 1084 ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 15

From the President

Valuation for Banking or Insurance company in addition presentation of experts on various aspects of financial to corporate valuation. Therefore, it becomes markets and corporate governance and creating useful necessary for Company Secretaries to understand the web contents for corporates; Conducting Investor intricacies of valuation principles and techniques. As Awareness programmes and education programmes part of capacity building initiatives, the Institute has related to capital market; Research in Capital Market decided to introduce a Certificate Course on Valuation through regular exchange of resources. so as to build the skills and expertise of its members in carrying out the valuation assignment relevant to MOU with NSE today's business environment. The Institute has entered into an MOU with National Stock Exchange of India Ltd. The areas of collaboration I am pleased to inform you that this Certificate Course under MOU include, Fee concession to the students of aims at providing insight into the various conceptual, ICSI, in NSE's Certification in Financial Markets technical and procedural aspects of valuation including (NCFM) modules, being conducted by NSE; Visits of Valuation of tangible or intangible assets; Valuation of Students and Members of ICSI to NSE through ICSI- shares; Valuation of takeover target; Exchange ratio in CCGRT; Training to Company Secretaries in securities merger or amalgamation, is proposed to be launched markets and corporate governance; Joint organisation at 40th National Convention of Company Secretaries. of Investor Awareness Programmes; Joint compliance Meeting of the Coordination seminars for the trading members of NSE and Compliance Officers of the listed companies; Regular Committee exchange of resources of mutual interest and The meeting of Co-ordination Committee of three Exchange of faculty(ies); Co-operation in developing Institutes, i.e., the Institute of Company Secretaries of curriculum of academic and continuing education India, Institute of Chartered Accountants of India and programmes and developing new certification the Institute of Cost Accountants of India was held on modules. August 06, 2012 at the Headquarters of the Institute. The committee discussed professional development Student Conferences issues, reciprocal arrangements which inter-alia I compliment Nagpur and Coimbatore chapter for their includes joint organisation of short-term courses in initiatives towards student development. The students emerging areas, reciprocal paperwise exemption of Coimbatore Chapter presented "CORP QUEST between ICSI and ICAI, sharing of knowledge 2012" being on the theme "Pace Towards Corporate competencies, sharing of space and resources at World" on August 18, 2012, at Coimbatore. The chapter locations, common overseas offices, joint Nagpur Chapter of Western India Regional Council of representation to CBEC on matters relating to the Institute organised Annual Regional Conference for applicability of Service Tax, joint professional CS students on August 18-19, 2012 at Nagpur. development programmes at national, regional and 16th Annual International chapter levels, announcement of advertisement in each other's journal and recognition of Fellow Conference of ICPSK Membership of the Institute(s) for appointment as Mr. Umesh Ved, Council Member, the ICSI and myself Faculties/Associate Professors/Professors in AICTE attended 16th Annual International Conference of approved management institutes in the area of Institute of Certified Public Secretaries of Kenya Management Discipline etc. (ICPSK) held on 8th to 10th August, 2012. The theme of the Conference was "Governance Perspectives in MOU with BSE-IPF Harnessing Natural Resources for Development". The The Institute has entered into an MOU with the Stock Conference was designed to provide a platform for the Exchange Investors' Protection fund, a recognised participants to share information and exchange views Public Trust established by BSE Limited. The areas of with Technocrats, Policy Makers and implementers at collaboration under MOU include Conducting investor professional level. awareness programmes on Micro, Small & Medium Enterprises (MSMEs); Conducting programmes for I, as President of CSIA, led the Roundtable Discussion creating awareness about International Financial on Governance Forum on Integration of Company Reporting Standards (IFRS); Training and education Secretaries Profession held on 9th August, 2012. The programmes in financial market interface with other participants were from Kenya, Bangladesh and corporate laws, secretarial practices and corporate Rawanda. It was agreed to concentrate first on East governance; Webcasts of panel discussions and September 1085 CHARTERED SECRETARY 2012 ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 16

From the President

African countries like Rawanda, Tanzania, Brundi, corporation are inculcated and manifested. The Institute Uganda and South Sudan. Mr. Umesh Ved also has always been making its best endeavour to imbibe attended and participated in the discussion. the good governance principles amongst the Indian Visit to Tanzania corporate sector. We also visited Tanzania from August 11-14, 2012 and As one step ahead on its vision, the Institute celebrated met Deputy Registrar and Assistant Registrar, Ministry "2nd ICSI Corporate Governance Week" on the theme of Industry and Trade, Business Registration and Good Governance for Sustainability, from 27th to 31st Licencing Agency (BRELA) and Mr. Gandence Cassian August, 2012 by organizing five mega programmes at Kayombo, Member of Parliament, Government of Bengaluru, Hyderabad, Mumbai, Kolkata and New Tanzania and briefed about the ICSI and the Corporate Delhi. In addition, the programmes, talks and other Secretaries International Association (CSIA). We also events on corporate governance were also organised discussed about the multi dimensional role of the through the Institute's Regional Councils and Chapters Company Secretaries in Boardrooms in India and also during the week. The following publications of the informed about the various recognitions accorded to the Institute were released during the Corporate profession of Company Secretaries by the Government Governance Week : of India. 1. Role of Company Secretary in Corporate During our meeting with Dr. Adelhelm Meru, Director Governance General, Export Processing Zones Authority (EPZA) 2. Gender Diversity in Boardrooms Tanzania and Prof. Bonaventure Rutinwa, Dean, 3. Responsibly Managing E-waste School of Law, University of Dar es Salaam, Tanzania, 4. Sustainability Reporting for Sustainable Future we apprised them about the role and functions of ICSI 5. Theme Paper on Good Governance for and the profession of Company Secretaries in India and Sustainability requested them to support the Tanzania Institute of Corporate Secretaries & Advisors (TICSA). I wish to place on record my sincere appreciation to my colleagues on the Council, particularly Chairman and 40th National Convention Members of the Corporate Laws and Governance The theme of the 40th National Convention VISION Committee, Programme Directors, Chairmen of 2020 - TRANSFORM, CONFORM AND PERFORM to Regional Councils and Chapters for extending their be held at Aamby Valley on October 4-6, 2012 would whole hearted support in making the 2nd ICSI certainly enable you to strengthen your professional Corporate Governance Week a grand success. networking, besides, thought provoking discussions Appointment of Chief Executive and deliberations during technical sessions would provide a clear insight into Imperatives for (Designate) Professionals including Company Secretaries in guiding The Council of the Institute has appointed Shri Sutanu the Boards to minimize the impact of economic Sinha, FCS, who was Senior Director (Academics & volatility, through risk management measures; The Professional Development), as the 'Chief Executive professional dilemma for Company Secretaries to Designate' w.e.f. August 31, 2012. prioritize, when to be a conscience keeper and when to be a whistle blower; Role of financial markets to enable With kind regards, the economies to withstand the economic volatility; Financial, infrastructure and governance issues in SMEs; and Professional support and guidance to SME Yours sincerely, to make it sustainable business proposition to ensure global presence through alliances and acquisitions. I look forward to meet you at this gala event. 2nd ICSI Corporate New Delhi Governance Week August 31, 2012 Corporate Governance is the evolution of a culture by (CS NESAR AHMAD) which the values, principles, management policies of a [email protected]

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Articles

B.C. Thiruvengadam Sr. Partner Thiru & Thiru Law Firm, Bengaluru

[email protected] Arbitrability of Disputes Relating to Oppression and Mismanagement

While highlighting the importance to thwart any attempt to oust the jurisdiction of Company Law Board in a petition for oppression and mismanagement, the author suggests as to how the Company Law Board should handle situations where petitions are filed for oppression and mismanagement to circumvent an arbitration agreement.

INTRODUCTION Arbitration is a dispute resolution mechanism between two or more parties ending in an award that would bind the parties to the The moot point is, in a petition for relief in arbitration proceedings and no others. In a pending litigation, a cases of oppression and party has a right to ask the court to refer the case for arbitration if, mismanagement against a company, can and only if,:- the persons in control of the company or (a) there is a subsisting contract with an arbitration clause to refer the company as such, attempt to oust the all disputes arising from the contract to arbitration; T jurisdiction of the Company Law Board by (b) the subject matter of the litigation is governed by the filing an application under Section 8 of the arbitration agreement; Arbitration and Conciliation Act,1996, to and refer the dispute for arbitration on the (c) all the parties to the said litigation are parties to the arbitration ground that the petitioner is party to a agreement. subsisting agreement between the persons in control of the company and or It is well established that not all disputes can be arbitrated. the company, and that there exists an According to Russell, disputes affecting civil rights in which arbitration clause in such a subsisting damages are claimed may be referred to arbitration. Civil disputes agreement? concerning personal chattel or personal wrong, breaches of contract in general, trespass, slander, disputes relating to tolls or real-estate can be referred for arbitration1. It is a widely accepted * views expressed in this article are the personal views of the principle that matters which are criminal in nature are not to be author only. arbitrated. Courts have consistently held that disputes which are 1 Russell On Arbitration, Twelfth Edition not in personam cannot be referred for arbitration. If an September infringement, which is civil in nature, affects the rights of third 2012 CHARTERED SECRETARY1088 (A -338) ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 19

Articles Arbitrability of Disputes Relating to Oppression and Mismanagement

parties, or public at large or the state, the same cannot be referred A right under Sections 397 and 398 of the for arbitration. As a corollary to this, disputes in rem are not Act is like a bullet that is fired out of a gun suitable to be arbitrated, for example, disputes relating to construction of Wills or matters relating to charities. and cannot return. Strictly speaking, if such a right is exercised, it cannot be withdrawn. Rights of a member of the company are twofold, viz., contractual rights and statutory rights. Contractual rights create a legal right in It is for the Company Law Board to favour of the contracting party which includes right to perform, formulate an opinion under Sections 397 right to demand performance of a contract and right to take (2) and 398 (2) of the Act to formulate an remedial action in the event of breach of contract. Statutory rights are independent of contractual rights, which are conferred opinion whether the company's affairs are specifically to a person or persons by a statute, subject to certain being conducted in a manner prejudicial to conditions as may be prescribed in the said law. Palmer2, based on the rule of Foss v. Harbottle3, groups the statutory rights of public interest or in a manner oppressive to members of a company as follows: any member or members or in a manner (1) Individual Membership rights prejudicial to the interests of the company; (2) Qualified Minority rights (3) The remedy for unfairly prejudicial treatment or that a material change has taken place (4) Application for sequestration of assets of the company and the in the management or control of the appointment of a judicial factor. company, that by reason of such change, it Unlike individual membership rights, qualified minority rights can is likely that the affairs of the company will be exercised in co-operation by a group of minority shareholders, be conducted in a manner prejudicial to as prescribed in law. Rights conferred under Sections 397 and 398 of the Companies Act, 1956 (the 'ACT') are, to a large extent, public interest or in a manner prejudicial to qualified minority rights under Section 399 of the Act, to be the interests of the company. exercised either collectively as a group or by the member himself if he is qualified to do so. Palmer4 states that the purport of It appears to be ironic, that while a member can exercise his qualified minority right is to provide minority members access to a individual membership right to seek the extreme step of winding- competent dispute resolution forum against oppression by a up of a company, fetters have been placed when it comes to qualified majority of members. exercising his right to apply to the Company Law Board to regulate the affairs of the company under sections 397 and 398 of With respect to investment and management of companies, the Act. However, if we analyse the legislative wisdom behind the contractual relationships are established between two or more provisions, it is not an irony at all. The terms "just and equitable" members, irrespective of whether the company is a party to the used in Section 433 (f) and in the context of Sections 397 and 398 contract or not, say, with respect to acquisition of shares, transfer of the Act would mean, being fair to all other stake holders, of shares, constitution of the Board of Directors or Managerial creditors and the public at large when the persons at the helm of powers, etc. Contract may contain an Arbitration clause to refer all the affairs of the Company have been conducting the affairs of the disputes between the parties for Arbitration. At times, the terms of company in an unfair manner - involving oppression of minority the contract are ushered into the Articles of Association of the shareholders and mismanagement. It is in a situation beyond company with intent to bind the company as well as all its redemption or correction that Section 433 (f) of the Act is pressed members, who are not parties to the original contract. into service. The Supreme Court, in the case of S. P. Jain v. Quite often, such contractual rights intertwine or merge with Kalinga Tubes Ltd 5, observed that, "the principle of 'just and statutory rights and the distinction between these rights becomes equitable' clause baffles a precise definition. It must rest with the hazy and confusing. judicial discretion of the court depending upon the facts and circumstances of each case. When there is lack of probity in the While Sections 397 and 398 require a member of a company to management of the Company and there is no hope or possibility be qualified under Section 399 of the Act, such a qualification is of smooth and efficient continuance of the company as a not required for a member to seek winding up of a company under commercial concern, there may arise a case for winding up on the "Just and Equitable" grounds by invoking Section 433 (f) of "just and equitable" ground . The Apex court, in the case of Hind the Act.

5 2 Palmer on Company Law, Twenty-third Edition AIR 1965 SC 1535 3 (1843) 67 ER 189 4 Ibid 2 September (A-339) 1089 CHARTERED SECRETARY 2012 ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 20

Articles Arbitrability of Disputes Relating to Oppression and Mismanagement

Overseas Private Limited v. Raghunath Prasad Jhunjhunwalla,6 It is significant to note that the first ever legislation in England to held that "the court may refuse to make an order of winding-up of regulate corporate entities was the Bubble Act, 1720, which was a company on the basis of just and equitable ground, if it is of enacted in public interest to prevent bubble companies defrauding opinion that some other remedy is available to the petitioners and investors and creditors. Though the Bubble Act, 1720 was winding up of the Company would be unfair to the other members repealed in 1825, subsequent legislations retained the spirit of and Sections 397 and 398 of the Act are preventive provisions public interest. Vide Companies (Amendment) Act, 1963 that would safeguard against oppression in management as provisions under Section 398 and 399 of the Act were amended, against the extreme step of winding-up". Invoking Section 433 (f) to bring within its ambit, conduct of the company and its of the Act is an act similar to calling for a hearse van, while management, which may be prejudicial to the interest of invoking Sections 397 and 398 of the Act is like calling an the public. Ambulance. This position is made very clear in Section 397 (2) (b) which reads thus "that to wind up the company would unfairly The term "oppression" refers to lack of probity and fair dealing in prejudice such member or members, but that otherwise the facts the affairs of a company to the prejudice of some portion of its would justify the making of a winding-up order on the ground that members8. Black's Law Dictionary9 defines "Oppression" as "The it was just and equitable that the company should be wound up…" act or instance of unjustly exercising authority or power - unfair treatment of minority shareholders by directors or those in control While discussing the moot issue, it is inevitable that one dwells of the corporation". Random House Dictionary10 defines upon the question whether a member has a mere Right to invoke "Mismanage" as "to manage incompetently or dishonestly". The provisions of Sections 397 and 398 of the Act or is it coupled with definitions of the said terms strays far away from what would a duty? It is the inherent duty of a member of a company to bring amount to contractual obligations. Further, the Scope of the to the notice of a regulator about any wrong doing with regard to provisions of Sections 397 and 398 of the Act are more in rem the affairs of the company. The statutory right and inherent duty than in personum. The powers of the CLB are derived under are two sides of a coin, and even if a member would like to waive Section 402 and 403 of the Act. his statutory right, he would fail in his duty by not espousing the cause of (a) larger interest of the members, b) public interest and The said powers are: c) Company's interest, as a company is a legal entity, distinct from its shareholders. Even if a member wants to waive his statutory (a) The regulation of the conduct of the company's affairs in future right, he cannot do so or cannot be compelled to do so. In (b) The purchase of the shares or interests of any members of the Corpus Juris Secundum 7 the law as to waiver is stated as follows company by other members thereof or by the company (c) In the case of a purchase of its shares by the company as "...... a waiver in derogation of a statutory right is not favoured, aforesaid, the consequent reduction of its share capital and a waiver will be inoperative and void if it infringes on the rights (d) The termination, setting aside or modification of any of others, or would be against public policy or morals .." agreement, howsoever arrived at, between the company on the one hand; and any of the following persons, on the other, A right under Sections 397 and 398 of the Act is like a bullet that namely:- is fired out of a gun and cannot return. Strictly speaking, if such a (i) The managing director, right is exercised, it cannot be withdrawn. It is for the Company (ii) Any other director, Law Board to formulate an opinion under Sections 397 (2) and (v) The manager, 398 (2) of the Act to formulate an opinion whether the company's upon such terms and conditions as may, in the opinion of the affairs are being conducted in a manner prejudicial to public Company Law Board, be just and equitable in all the interest or in a manner oppressive to any member or members or circumstances of the case; in a manner prejudicial to the interests of the company; or that a (e) The termination, setting aside or modification of any material change has taken place in the management or control of agreement between the company and any person not referred the company, that by reason of such change, it is likely that the to in clause (d), provided that no such agreement shall be affairs of the company will be conducted in a manner prejudicial terminated, set aside or modified except after due notice to the to public interest or in a manner prejudicial to the interests of the party concerned and provided further that no such agreement company. This Qualified Minority Right is a mere trigger and it is shall be modified except after obtaining the consent of the for the Company Law Board to decide as to whether a case has party concerned; been made out for it to interfere into the affairs of the company (f) The setting aside of any transfer, delivery of goods, payment, or not. execution or other act relating to property made or done by or against the company within three months before the date of 6 AIR 1976 SC 565 7 Corpus Juris Secundum, Vol. 92 at page 1068 8 Elder v. Elder & Watson Ltd. (1952) Scottish Cases 49 9 Eighth Edition September 10 1999 edition 2012 CHARTERED SECRETARY 1090 (A -340) ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 21

Articles Arbitrability of Disputes Relating to Oppression and Mismanagement

Finance (P) Ltd 13 In the case of Prime Century City Dev. v. Ansal Buildwell Ltd 14, the Delhi High Court held that a statutory power cannot be exercised by an arbitrator. This judgment is an extension of the ruling of the Apex Court in Haryana Telecom Ltd's case15 and holds that the provisions of the Companies Act cannot be regulated under the Arbitration and Conciliation Act 1996, merely because the latter was a subsequent enactment.

The Companies Act, 1956 as well as The Arbitration and Conciliation Act, 1996 are special enactments. Even though the latter is a subsequent enactment, it is pertinent to note that vide Companies (Amendment) Act, 1991, the word "Court" in Sections 397 and 398 of the Act was substituted by the words "Company Law Board". Vide Companies (Second Amendment) Act, 2002, the words "Company Law Board" have been substituted by the word "Tribunal". Though this amendment, as on this date, has not been given effect to, the Parliament in its wisdom had no intention to bring in an alternative dispute resolution mechanism, while it had taken care to amend the Civil Procedure Code by reinserting Section 89, vide Civil Procedure Code (Amendment) Act, 1999. the application under section 397 or 398, which would, if made Further, Section 9 of the Act would bar any agreement, including or done by or against an individual, be deemed in his articles and memorandum of association of the company, which insolvency to be a fraudulent preference; would override the provisions of the Companies Act, 1956.

(g) Any other matter for which in the opinion of the Company Law The next important issue that needs to be considered is whether Board, it is just and equitable that provision should be made. the Arbitration and Conciliation Act, 1996 would apply to any proceedings before the Company Law Board? Section 5 of the It is important to note that Section 402 (d) and (e) of the Act, Arbitration and Conciliation Act, 1996 states that, empowers the Company Law Board, to set aside or modify any "Notwithstanding anything contained in any other law for the time agreement between the company and any persons. This implies being in force, in matters governed by this Part, no judicial that even if there exists a contract containing an arbitration clause, authority shall intervene except where so provided in this Part." In irrespective of the Company being a party or not to such an other words, where it is necessary to seek an interim order under Agreement or even if there exists an Article containing any Section 9 of the Arbitration and Conciliation Act, 1996, or when an arbitration clause, the jurisdiction of the Company Law Board is application is filed to the Chief Justice of a High Court or any not ousted. In Bennett Coleman and Co. v. Union of India11, the person or institution designated by him under Section 11(5) of the Bombay High Court held that the powers conferred on the court Arbitration and Conciliation Act, 1996, or where an appeal is filed under section 402 proceeds to indicate what type of orders the under Section 37 of the Arbitration and Conciliation Act, 1996, court could pass and clauses (a) to (g) indicate the widest there is hardly any scope for a civil court to entertain any suit or amplitude of the court's power: under clause (a), the court's order petition between two or more parties, who are also parties to an may provide for the regulation of the conduct of the company's arbitration agreement under Section 7 of the Arbitration and affairs in future and under clause (g), the court's order may Conciliation Act, 1996. provide for any other matter, for which, in the opinion of the court, Though the term "Court" has not been used in Section 5 of the it is just and equitable Arbitration and Conciliation Act, 1996, the terms "Judicial that provisions should be made. In the case of Surendra Kumar Authority" would imply only a Court and not a "Quasi-judicial Dhawan v. R.Vir12 it was held that shareholders have a right to file authority", such as the Company Law Board or any Tribunal. The a petition under Sections 397 and 398 of the Act subject to term "Judicial" as defined under Black's Law Dictionary16 would Section 399 of the Act and any article in the Articles of Association mean "of, relating to, or by the court or a judge". In my opinion, no of the company providing for arbitration, cannot debar the jurisdiction of the court in such a matter. Similar view was 14 (2003) 113 Comp Cas 68 (Del) expressed by the Delhi High Court in O.P. Gupta v. Shiv General 15 AIR 1999 SC 2354 16 Eighth Edition 11 (1977) Comp Cas 92 (Bom) 12 (1977) 47 Comp Cas 276 (Del) 13 (1977) 47 Comp Cas 279 (Del) September (A -341)1091 CHARTERED SECRETARY 2012 ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 22

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Board as a Civil Court for all purposes. Accordingly, where a If, in the opinion of the Company legislation constitutes special courts for certain purposes to the Law Board, the averments and exclusion of all other courts, it would depend upon the context in which, and the purposes for which, the jurisdiction of other courts allegations made in the petition do is excluded, to see whether the jurisdiction of the Company Law not substantiate any cause that Board would be affected or not. Hence, the author is of the opinion that provisions of Section 5 of the Arbitration and Conciliation Act, would be termed as oppressive 1996 will not and should not apply to proceedings under Section or that there is mismanagement, 397 and 398 of the Act before the Company Law Board or any Tribunal that is to be constituted. and further finds that the petitioner In conclusion, while attempting to warrant the jurisdiction of the has filed the petition to circumvent Company Law Board in a given case where a party attempts to the arbitration agreement to oust its jurisdiction based on an arbitration clause, he may be resolve their disputes through justified in raising the following questions: arbitration, it should relegate the a) Is a party justified in filing a petition under sections 397 and 398 for oppression and mismanagement with a view to parties to arbitration. circumvent the arbitration clause and in such an event, what is the remedy available to the respondent? quasi-judicial authority or a Tribunal, not being recognized as a Court under any law would qualify to be termed as a "judicial (b) In such a petition, persons who are not party to the arbitral authority" within the meaning of Section 5 of the Arbitration and agreement may have been arrayed as parties, without Conciliation Act, 1996. A three judge bench of the Supreme Court seeking any specific relief against them. How should the in Bhatia International v. Bulk Trading SA 17 observed that "Section Company Law Board deal with such cases? 5 provides that a judicial authority shall not intervene except where so provided in Part I. Section 8 of the said Act permits a (c) Should the question of jurisdiction be tried at the threshold? judicial authority before whom an action is brought in a matter to refer parties to arbitration. If the matters were to be taken before (d) Should the Company Law Board decide these issues while a judicial authority in India it would be a Court as defined in deciding the main petition? Section 2(e). Thus if Part I was to only apply to arbitrations which take place in India the term "Court" would have been used in It is always safe to err on the right side of law rather than on the Sections 5 and 8 of the said Act." wrong side. It is safe and fair for the Company Law Board, subject to the petition being maintainable under Section 399 of the Act, to It is pertinent to point out that, with regard to Section 397 or consider all the issues as part of the main petition. It would be the Section 398 of the Act, prior to the Companies (Amendment) Act, bounden duty of the Company Law Board to exercise its power 1988, the powers under the said provisions were exercised by the vested under Sections 397(2) and 398(2) of the Act to formulate High Courts. Subsequent to the amendment to the Act and having such opinion as prescribed therein. This process should be transferred such powers to a Tribunal in the form of the Company completed as expeditiously as possible. If, in the opinion of the Law Board, it is difficult to accept the Company Law Board as a Company Law Board, the averments and allegations made in the Court. Even though the Company Law Board exercises the power petition do not substantiate any cause that would be termed as of a Court, it is not a Court in the strict sense of law. In Prakash oppressive or that there is mismanagement, and further finds that Timbers v. Sushma Singhla & Anr.18, the Allahabad High Court the petitioner has filed the petition to circumvent the arbitration held that the Company Law Board has trappings of a Court, but is agreement to resolve their disputes through arbitration, it should not a Court in the strict sense. The Supreme Court, in ANZ relegate the parties to arbitration. This exercise cannot and should Grindlays Bank v. National Hydro Electric Power Corpn. Ltd 19, not be done at the threshold without going into the merits of the held that though certain powers of the Court under the Civil allegations made in the petition. Where there is a pending arbitral Procedure Code have been vested in the Company Law Board proceedings, the Company Law Board should proceed with the for certain purposes, that does not render the Company Law matter as if there is no such pending arbitral proceedings, for the reason that the Company Law Board is a quasi-judicial authority 17 AIR 2002 SC 1432 and not a full-fledged judicial authority within the meaning of 18 AIR 1995 All 320 Section 5 of the Arbitration and Conciliation Act 1996. 19 1995 82 Comp Cas 745 CLB

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Articles

V. Durga Rao* Advocate, Madras High Court Chennai

[email protected]

Arbitrability of Disputes Relating to Oppression and Mismanagement

Arbitrability of disputes pertaining to oppression and mismanagement is a tricky and complicated issue. There cannot be any hard and fast rule. This comprehensive article addresses the issues that arise in this regard.

cases. If it is a civil case and if the court is not required to follow INTRODUCTION any special procedure, then, the Court is supposed to follow the procedure prescribed under Civil Procedure Code, 1908. If the he Arbitration and Conciliation Act, 1996, stakes are considerable and one party wants to resist the early was intended to comprehensively cover disposal of the case, then, it is possible for him to drag the matter international and commercial arbitrations for years. Civil Procedure Code, 1908 (CPC) contains a very and conciliations as also domestic detailed procedure to be followed by the Courts unlike the arbitrations and conciliations. It envisages Arbitrator under the provisions of Arbitration and Conciliation T the making of an arbitral procedure which Act, 1996. There is lot of corruption in the system and the Court is fair, efficient and capable of meeting the papers can also go missing. Even when a civil case reaches needs of the concerned arbitration and for Supreme Court in an Appeal, it is quite possible that the other matters set out in the Objects and Supreme Court can order a re-trial. This is what happens with Reasons for the Bill. The Act was the existing court system and it is unlikely that we can correct intended to be one to consolidate and this system in the near future. No commercial contract is entered amend the law relating to domestic into now-a-days without an 'Arbitration Clause'. Parties to any arbitrations, international commercial dispute can get their dispute referred to Arbitrator by agreement arbitrations and enforcement of foreign even in the absence of an 'Arbitration Clause' in the Agreement. arbitral awards, as also to define the law If there is a difficulty in getting a mutually acceptable Arbitrator relating to conciliation and for matters appointed, then, the parties can approach the Court under connected therewith or incidental thereto. Section 11 of Arbitration and Conciliation Act, 1996. If there is a commercial contract without any 'Arbitration Clause', and if Everyone understands as to what happens if one disputes arise between the parties, then, one party is likely to approaches the Court for relief and especially in civil suffer irreparable loss as the wrong-doer will use the

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For a complete understanding as to what is arbitration, section 7 of Arbitration and Conciliation Act, 1996 is to be looked-into and the same is reproduced below:

"7. Arbitration Agreement. - (1) In this Part, "arbitration agreement" means an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not. (2) An Arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement. (3) An arbitration agreement shall be in writing. (4) An arbitration agreement is in writing if it is contained in - (a) a document signed by the parties; (b) an exchange of letters, telex, telegrams or other means of telecommunication which provides a record of the technicalities in his favour and prefer to get the dispute settled agreement; or only by a Civil Court. If any commercial dispute is stuck with the (c) an exchange of statements of claim and defence in Courts, then, anyone can reasonably presume as to when the which the existence of the agreement is alleged by one dispute is likely to be settled. Parties prefer to get their disputes party and not denied by the other. settled out-of court many a times despite approaching the Court (5) The reference in a contract to a document containing an and pursuing the matter for few years. It is in this background, arbitration clause constitutes an arbitration agreement if the individuals and companies prefer to get their disputes settled contract is in writing and the reference is such as to make through 'Alternative Modes of Adjudication or Alternative Dispute that arbitration clause part of the contract." Resolution Mechanism (ADR)' like arbitration. There is considerable encouragement from the judiciary and also from If the parties to the dispute want to get their dispute settled the legal professionals towards 'Alternative Dispute Resolution through arbitration mechanism, then, there shall be an Mechanisms' like mediation and arbitration. In order to agreement between them to that effect. Though, now-a-days, understand the issue of 'Arbitrability of Disputes relating to every commercial agreement contains an 'arbitration clause' and Oppression and Mismanagement', it is important to know some even if there is no specific arbitration clause in the agreement or basic issues about Arbitration, Arbitration mechanism and arbitration agreement, if the parties to the dispute agree for a 'oppression and mismanagement' and the same are discussed settlement of their disputes through arbitration mechanism, they hereunder. can do so on their own through an agreement or can get an arbitrator appointed by the Court under section 11 of Arbitration What is Arbitration? and Conciliation Act, 1996. In simple words arbitration is a process of adjudication of disputes between the parties by a mutually agreeable person or Effect of 'Arbitration Clause': persons, following a procedure agreed upon by the parties to the Unless the subject-matter cannot be decided by the Arbitrator or dispute or decided by that person. The person who decides the the subject matter cannot oust the jurisdiction of a particular dispute is called 'Arbitrator' and he is the judge to decide that authority, no judicial authority can entertain a dispute which particular dispute. The Arbitration and Conciliation Act, 1996 ought to have been decided by an Arbitrator. Section 8 of comprehensively covers international and commercial Arbitration and Conciliation Act, 1996 deals with the effect of arbitrations and conciliations as also domestic arbitrations and arbitration and reads thus: conciliations. Section 2 (a) & (b) of Arbitration and Conciliation Act, 1996 defines the word 'Arbitration', 'Arbitration Agreement' "8.Power to refer parties to arbitration where there is an and those are reproduced below: arbitration agreement.- (1) A judicial authority before which an action is brought in a "2.Definitions - matter which is the subject of an arbitration agreement shall, (a): "arbitration'' means any arbitration whether or not if a party so applies not later than when submitting his first administered by permanent arbitral institution; statement on the substance of the dispute, refer the parties (b) "arbitration agreement" means an agreement referred to arbitration. to in section 7;" (2) The application referred to in sub-section (1) shall not be September entertained unless it is accompanied by the original 2012 CHARTERED SECRETARY1094 (A -344) ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 25

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arbitration agreement or a duly certified copy thereof. Now, even an isolated incident in the (3) Notwithstanding that an application has been made under Company can entitle the minority sub-section (1) and that the issue is pending before the judicial authority, an arbitration may be commenced or shareholders to approach the Company continued and an arbitral award made." Law Board under section 397/398 of the Companies Act, 1956 if it is prejudicial to How Arbitration is different from the members of the Company, the Court adjudication? company or against public interest. The While courts follow Civil Procedure Code, 1908 (CPC) in effect of the incident is looked into. deciding a dispute the Arbitrators follow a procedure agreed However, it is safe to presume that there upon by the parties or the appropriate procedure will be decided by the Arbitrator in the absence of an agreement between the can not be any hard and fast rule as to parties. Though the procedure followed by an Arbitrator is when a relief can be granted to the minority different, an Arbitrator is bound to follow 'substantial law' which under section 397/398 of the Companies determines the rights and liabilities of the respective parties to the dispute. Section 19 of Arbitration and Conciliation Act, 1996 Act, 1956. This issue is very significant to specifies the rules of procedure to be followed by an Arbitrator understand the 'arbitrability of disputes and the same is reproduced below: relating to oppression and mismanagement'. "19. Determination of rules of procedure.- (1) The arbitral tribunal shall not be bound by the Code of Civil difference between Arbitration and adjudication through Courts. Procedure, 1908 (5 of 1908) or the Indian Evidence Act, 1872 (1 of 1872). It is also to be noted that the spirit behind the existing procedural (2) Subject to this Part, the parties are free to agree on the laws followed by the Courts are normally followed by the procedure to be followed by the arbitral tribunal in conducting Arbitrator and an Arbitrator has to adhere to the 'principles of its proceedings. natural justice'. If a person wants to file a Civil Suit in a Civil (3) Failing any agreement referred to in sub-section (2), the Court, he will present a plaint which contains particulars of the arbitral tribunal may, subject to this Part, conduct the parties concerned, the facts of the case and the relief sought. proceedings in the manner it considers appropriate. The opposite side will present a written statement and can also (4) The power of arbitral tribunal under sub-section (3) includes file additional written statement with his defence or can also file the power to determine the admissibility, relevance, a counter-claim. Interim applications are also filed by the parties materiality and weight of any evidence." in a Civil Court. Same happens with the proceedings before the Arbitrator also. A claim is filed with the Arbitrator and the The biggest advantage with the Arbitration mechanism is that the opposite side is supposed to file its reply and they can also file a Arbitrator need not follow Civil Procedure Code which delays the counter-claim. Interim applications can also be filed and certain disposal of a case in Courts. The parties to an 'arbitration interim relief can be granted by the Arbitrator while the Courts agreement' can agree on the 'place of arbitration', 'can agree on are also empowered to grant interim relief before, during or after procedure', 'frequency of sittings with the consent of Arbitrator', the Arbitration proceedings under Section 9 of Arbitration and can share the expenses incurred and can object to the Conciliation Act, 1996. proceedings if it is established that the Arbitrator is acting in a biased manner. Again, when it comes to a civil case, the parties Oppression and Mis-management? can go for 'First Appeal', 'Second Appeal' and an Appeal to Section 399 of the Companies Act, 1956 provides a right to the Supreme Court also. In cases decided by the Arbitrator, the minority shareholders, subject to qualification, to approach the aggrieved party can file a petition under section 34 of Arbitration Company Law Board seeking relief against 'Oppression and Mis- and Conciliation Act, 1996 on some specific grounds and only an management'. Chapter-V containing sections 397 to 409 of the Appeal is available under section 37 of the Act. Though there are Companies Act, 1956 deals with 'Prevention of Oppression and problems with existing legal-frame work governing Arbitrations, Mis-management'. Among these sections, it is very important to dispute resolution through arbitration is very much preferable understand sections 397, 398, 399 and 402 of the Companies when it comes to commercial disputes. The criticism of existing Act, 1956. Section 397 deals with the issues of oppression, Arbitration mechanism is that it is too costly, can be delayed like related issues and the powers of Company Law Board to put an an ordinary civil suit in a Civil Court, non-availability of competent end to the matters complained of. Section 398 of Companies Arbitrators and this mechanism benefits one party with the one- sided 'arbitration clause' in the agreement. Thus, there is a clear September (A -345)1095 CHARTERED SECRETARY 2012 ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 26

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Act, 1956 deals with the issue of mis-management, related issues and the powers of the Board to put an end to the matters complained. Section 402 specifically deals with the powers of Tribunal under section 397/398. Though section 397/398 is meant to provide relief to the minority shareholders in the Company against the oppressive actions of the majority as the majority effectively controls the affairs through Board, there was a precedent that even the majority can approach the Company Law Board under section 397/398 of the Companies Act, 1956 when they are made as 'artificial minority'. Dealing with the issue of majority approaching the Company Law Board under section 397/398 of Companies Act, High Court of Kerala, in Dr. V. Sebastian and others v. City Hospital P.Ltd. and others, (1985) 57 Comp Cas 453, has held that "sections 397 and 398 of the Companies Act, 1956, are intended primarily to protect minority interests. In ordinary cases, the majority will be able to protect itself by controlling the directors at general body meetings. But where the majority is prevented from doing so, despite the clear indication in the articles that majority rule based on the right to apply to the Company Law Board for an order under this demand poll should operate as a correcting influence, the section, provided such members have a right so to apply in majority becomes an artificial minority entitled to claim protection virtue of section 399. under sections 397 and 398". (2) If, on any application under sub-section (1), the Company Law Board is of opinion Though section 397 and section 398 separately deals with the (a) that the company's affairs are being conducted in a issues of 'oppression' and 'mis-management', both are closely manner prejudicial to public interest or in a manner related and connected. It is settled that even a composite petition oppressive to any member or members; and is maintainable under section 397/398 of the Companies Act, (b) that to wind up the company would unfairly prejudice such 1956 resulting in claiming relief under section 111A and under member or members, but that otherwise the facts would section 237 asking for the investigation into the affairs of the justify the making of a winding up order on the ground that Company usually. Though it is settled that the powers of it was just and equitable that the company should be Company Law Board under section 397/398 of Companies Act, wound up; 1956 are wide and section 402 cannot limit the powers of the the Company Law Board may, with a view to bringing to an end Board under section 397/398, the powers of the Company Law the matters complained of, make such order as it thinks fit." Board under section 397/398 of the Act are preventive in nature though remedial measures can also be passed. There were "398 - Application to Company Law Board for Relief in cases many precedents as to what is 'oppression' and when a petition of mismanagement. is maintainable and relief be granted under section 397/398. (1) Any members of a company who complain Dealing with the meaning of 'oppression' under section 397, the (a) that the affairs of the company are being conducted in a High Court of Madras, in C. P. Gnanasambandam v. Tamiland manner prejudicial to public interest or in a manner Transports (Coimbatore) Private Ltd (1971) 41 Comp Cas 27, prejudicial to the interests of the company ; or has held; "Oppression means burden some, harsh and (b) that a material change (not being a change brought about by, wrongful". Again, what is 'burdensome, harsh and wrongful' is a or in the interests of, any creditors including debenture subject matter of interpretation. A glance at sections 397 and holders, or any class of shareholders, of the company) has 398 of Companies Act, 1956 will give an idea as to when the taken place in the management or control of the company, minority can approach the Board seeking relief and the object of whether by an alteration in its Board of directors or manager, provision and the same are reproduced below: or in the ownership of the company's shares, or if it has no share capital, in its membership, or in any other manner "397- Application to Company Law Board for relief in cases whatsoever, and that by reason of such change, it is likely of oppression. that the affairs of the company will be conducted in a manner (1) Any members of a company who complain that the affairs of prejudicial to public interest or in a manner prejudicial to the the company are being conducted in a manner prejudicial to interests of the company ; public interest or in a manner oppressive to any member or may apply to the Company Law Board for an order under this members (including any one or more of themselves) may section, provided such members have a right so to apply in virtue September of section 399. 2012 CHARTERED SECRETARY 1096 (A -346) ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 27

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(2) If, on any application under sub-section (1), the Company under section 397/398 of the Companies Act, 1956. This issue is Law Board is of opinion that the affairs of the company are very significant to understand the 'arbitrability of disputes relating being conducted as aforesaid or that by reason of any to oppression and mismanagement'. material change as aforesaid in the management or control of the company, it is likely that the affairs of the company will Though there are many issues to be discussed and understood be conducted as aforesaid, the Company Law Board may, under section 397/398 of the Act, for the purpose of 'arbitrability with a view to bringing to an end or preventing the matters of disputes relating to oppression and mismanagement', another complained of or apprehended, make such order as it significant aspect under the said section is to be considered. It is thinks fit." about simultaneous proceedings and also the mentioning of other concluded proceedings under section 397/398 of The gist of section 397/398 is that in public interest, in the Companies Act, 1956. There are two legal concepts under the interests of the Company, in the interests of the members and provisions of Civil Procedure Code viz., Res subjudice and Res when the winding-up will unfairly prejudice the members, the judicata. The same dispute can be raised or adjudicated minority shareholders can approach the Company Law Board simultaneously before two forums and it is called 'Res subjudice'. and the Board is empowered to pass such orders to put an end A concluded proceeding can not again be decided except in an to the matters complained of. appeal available and it is called 'Res judicata'. Sections 10 and 11 of Civil Procedure Code, 1908 deal with 'Res subjudice' and It was maintained by the Courts earlier, that an isolated incident 'Res judicata'. Certain established concepts like 'Res subjudice' can not constitute an act of oppression and based on that and 'Res judicata' are followed by all forums, but, these concepts incident one can not maintain a petition under section 397/398 of are very important to a proceeding under section 397/398 of the the Companies Act, 1956. The Supreme Court of India, in Shanti Companies Act, 1956. On this issue, the High Court of Allahabad Prasad Jain v. Kalinga Tubes Ltd (1965) 35 Comp Cas 351, has in Jaypee Cement Limited, In re, (2004) 122 Comp Cas 855, has held that "there must be continuous acts on the part of the held that "the law is well settled that where the right sough to be majority shareholders, continuing up to the date of the petition, enforced by the suit is not a pre-existing common law right but is showing that the affair of the company were being conducted in a right created by statute which provides the remedy for breach a manner oppressive to some part of the members". of that right, the suit is "impliedly barred". The right of members of a company against oppression and mismanagement is not a The Madras High Court in C.P.Gnanasambandam v. Tamiland pre-existing common law right but is a right created by statute, Transports (Coimbatore) Private Ltd (1971) 41 Comp Cas 27, i.e., the Companies Act. Therefore, such suits were prima facie has held that "oppression may take various forms but an isolated not maintainable. It would be contrary to public policy to hold that act of oppression will not normally be sufficient to justify the relief if the oppression or mismanagement affects 10 per cent or more under these sections". The High Court of Delhi, in Chander members by numbers or shares they can approach the Krishan Gupta v. Pannalal Girdhari Lal Private Ltd. and others, Company Law Board under section 397/398 read with section (1984) 55 Comp Cas 702, has held that "that in order that relief 399 of the Companies Act and if it affects less than that number may be granted under section 397 of the Act, there must have they can institute suits. Further, even if the aggrieved members been continuous acts on the part of the majority shareholders were less than the minimum limit required by section 399, they oppression to the minority. This had not been shown in the were not rendered remediless, as they could approach the present case. Mere isolated illegal acts could not amount to Central Government, which could refer the case to the Company oppression. None of the acts alleged, even if true, would amount Law Board under section 401". Though there are several to oppression." judgments on this issue, it is not necessary to look into all those judgments, but, the issues in this regard can be summed-up as Though there cannot be any change with regard the precedents follows: defining the oppression as 'burdensome, harsh and wrongful" as l The Company Law Board will decide as to whether the it is also a question of interpretation, the long maintained principles of 'Res judicata' and 'Res subjudice' can be applied precedent of requiring 'continuity of acts' appears to have in a proceeding under section 397/398 of the Companies Act, changed now with the recent judgments, though the Company 1956 based on the facts of the case. Law Board continues to exercise a great amount of discretion in l If there is only an isolated incident which has been decided this regard. Now, even an isolated incident in the Company can by a Court, the members can not get a different finding from entitle the minority shareholders to approach the Company Law the CLB with the same facts. Board under section 397/398 of the Companies Act, 1956 if it is l Irrespective of pendency of other suits or claims, the CLB prejudicial to the members of the company, the company or can look into the issues raised under section 397/398 of the against public interest. The effect of the incident is looked into. Companies Act, 1956 and will take a decision in the interests However, it is safe to presume that there can not be any hard of the Company and in order to put an end to the matters and fast rule as to when a relief can be granted to the minority September (A-347)1097 CHARTERED SECRETARY 2012 ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 28

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complained. It is quite possible for the Company Law Board to allow the l To what extent the Company Law Board can look into the application under section 8 of Arbitration and Conciliation Act, other concluded proceedings referred and the pending 1996 if it comes to a conclusion that the disputes raised in the proceedings; is up to the subjective consideration of petition under section 397/398 can be adjudicated by an Company Law Board. Arbitrator. The judicial precedents with regard to the maintainability of section 397/398 of the Companies Act, 1956 on Arbitrability of Disputes relating to subjective issues to be noted in this regard. The issue as to whether an isolated incident can entitle the minority to approach Oppression and Mismanagement the Board under section 397/398 of the Companies Act, 1996, is The issue of 'arbitrability of disputes relating to oppression and so important in this regard. There cannot be any hard and fast rule mismanagement' is most complex and one can not say 'yes' or and the Board will take a decision in that regard and if the 'no' to the issue. However, without looking at the precedents Arbitration clause is pleaded and if the Board comes to the governing the issue of 'arbitrability of disputes relating to conclusion that the disputes raised before it can be adjudicated by oppression and mismanagement', one can easily say that the the Arbitrator, then, the Board can allow the application under jurisdiction of Company Law Board under section 397/398 of section 8 of Arbitration and Conciliation Act, 1996 subject to Companies Act, 1956 cannot be ousted through an arbitration satisfying the Board on other issues like arbitration clause and its clause on the following simple reasons. coverage. If the issue is looked from this angle, it can be said that the Arbitrator can decide the disputes pertaining to 'oppression l The CLB is supposed to look at the public interest also under and mismanagement'. The issue of again and again approaching section 397/398 of the Companies Act, 1956 and as such, we the Board under section 397/398, reference to concluded can assume that the Arbitrator may not be in a position to proceedings, simultaneous proceedings etc., to be considered by look at public interest as mandated. the Board keeping in view of the settled principles under the l In any proceeding before an arbitrator, a claim petition can provisions and especially the object of section 397/398 of the Act. be filed and it is similar to a plaint in a Civil Suit. In response Thus it is very difficult to lay a hard and fast rule under section to the Claim Petition, opposite party is required to file a 397/398 of the Companies Act, 1956 as has been held by Courts. counter-statement with his defence and it can also contain a Courts have dealt-with the issues of ousting the jurisdiction of counter-claim. In both plaint in ordinary civil suits before Civil Company Court with Arbitration Clause while entertaining Court and in proceedings before the Arbitrator, the claim or winding-up petitions. The High Court of Madras in Rolab the relief sought should be specific and both the Court and Polymers (P.) Ltd. v. Subhadra Enterprises, (1996) 85 Comp the Arbitrator may not be in a position to go beyond the Cas 617, has held that "that, moreover, the legal proceeding pleadings in normal circumstances. But, the power of which can be stayed under section 34 of the Arbitration Act Company Law Board under section 397/398 of the should be a proceeding in respect of any matter agreed to be Companies Act, 1956 is different and the object under referred. Unless the matter has been agreed to be referred, the section 397 is to put an end to the matters complained of, proceedings can not be stayed, even though it may incidentally public interest and the interests of the Company. The CLB have a bearing upon the contract providing for arbitration. In the may provide relief which is completely different from the relief instant case, it could not, by any stretch of reason, be said that sought by the petitioners under section 397/398. As such, it the parties contemplated that any reference to arbitration for is clear that the Arbitrator can not exercise or may lack winding up of the applicant company was possible or could be competence in dealing with the issues under section 397/398 done by an arbitrator". The Karnataka High Court in Hewlett of the Companies Act, 1956. Packard India Ltd. v. BPL Net. Com Limited, (2002) 2 Comp LJ 271 (Karn), has held that "it is the discretion of the court to However, the issue is complex. It can also be said that the entertain the company petition even if there is an arbitration disputes pertaining to oppression and mismanagement can be clause in the agreement". arbitrated. Whenever a party pleads the dispute resolution Parallels often drawn between the proposition that the 'winding- mechanism through arbitrator before a forum, an application up jurisdiction of Company Court can not be ousted by arbitration under section 8 of Arbitration and Conciliation Act, 1996 is clause' and the jurisdiction of the CLB under section 397/398. preferred. The forum before which the application is filed, will But, this may not be entirely correct. Because, Company Court take a final decision and even before a Civil Court, the decision exercises many functions under Part-VII of Companies Act, 1956 on section 8 of Arbitration and Conciliation Act, 1996 can not be and there is a great amount of responsibility on the Company mechanical in view of the elaborate judgment of Supreme Court Court during liquidation proceedings in public interest and in the in M/s. S.B.P. & Co. v. M/s. Patel Engineering Ltd. and Another, interests of various stake-holders. But, that's not the case with 2005 (8) SCC 618. the proceeding under section 397/398 of Companies Act, 1956 and once the Board gives a finding under section 397/398, in September normal circumstances, there ends the matter and the decision of 2012 CHARTERED SECRETARY1098 (A -348) ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 29

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Any article providing that a difference High Court, in Manavendra Ckhitnis and another v. Leela Chitnis between the company and its directors Studios P.Ltd. and others, (1985) 58 Comp Cas 113, that "merely because there is an arbitration clause or an arbitration or between the directors themselves or proceeding, or for that matter an award, the court's jurisdiction between any members of the company under sections 397 and 398 of the Companies Act, 1956, can not or between the company and any person stand fettered. On the other hand, the matter which can form the subject-matter of a petition under sections 397 and 398 cannot shall be referred to arbitration can not be the subject-matter of arbitration, for an arbitrator can have no debar the jurisdiction of the court in the powers such as are conferred on the court by sections such as matter of a petition under section 397 or section 402." 398. The court will not stay a petition under sections 397 and 398 on an Conclusion application under section 34 of the 'Arbitrability of disputes pertaining to oppression and mis- management' is a tricky and complicated issue. There can not be Arbitration Act, 1940, based on the any hard and fast rule. To conclude, the issues can be summed- arbitration clause". up as follows: l Nothing prevents the shareholders to get their disputes with CLB can be assailed to High Court under section 10 (F) of the the majority settled through arbitration mechanism, but, the Companies Act, 1956. Arbitrator deciding such a dispute can not be seen as a Presiding Officer exercising power under section 397/398 and On the issue of arbitrability of 'disputes pertaining to oppression the final order of the Arbitrator can not be equated with a and mismanagement', the High Court of Delhi, in Surendara finding of CLB in an application under section 397/398 of the Kumar Dhawan and another v. R.Vir and others, (1977) 47 Companies Act, 1956. Comp Cas 277, was pleased to observe that "the shareholders l The CLB exercising power under section 397/398 of the of a company have a right to file a petition under section 397 or Companies Act, 1956 is duty bound to look at the public section 398 of the Companies Act, 1956, for relief against interest and the interests of various stake holders even if they mismanagement or oppression, if the provisions of section 399 are not the members of the company. Certain orders of CLB are satisfied. Their right is a statutory right which, by section 9, under section 402 of the Act can affect the outsiders and the cannot be ousted by a provision in the articles of association of CLB observes the 'principles of natural justice' and takes the company. Any article providing that a difference between the every care that the interests of outsiders are not affected company and its directors or between the directors themselves without being heard. If it is said that the Arbitrator can or between any members of the company or between the exercise the power under section 397/398 of the Act, then, company and any person shall be referred to arbitration can not there is a possibility of getting collusive orders affecting the debar the jurisdiction of the court in the matter of a petition under outsiders and making things more complex. section 397 or 398. The court will not stay a petition under l The shareholders defending the petition under section sections 397 and 398 on an application under section 34 of the 397/398 of the Companies Act, 1956 can prefer an application Arbitration Act, 1940, based on the arbitration clause". On the under section 8 of the Arbitration & Conciliation Act, 1996 same lines, the High Court of Delhi, in O.P.Gupta v. Shiv seeking a reference based on the facts if they believe that the General Fianance (P.) Ltd. and others, (1977) 47 Comp Cas disputes raised are covered by an arbitration arrangement. It 279, has held that "merely because there is an article in the is for the CLB to take a view as to whether the disputes can articles of association of the company to the effect that any be settled by an Arbitrator and it's the discretion of CLB based dispute between the company on the one hand and its members on facts of that particular case. on the other will be referred to arbitration, the court will not stay l Inspite of any concluded proceedings, pendency of a petition under section 397 and 398 of the Companies Act, proceedings, conclusion of arbitration proceedings on some 1956, for relief against mismanagement or oppression in the issue or pendency of the arbitration proceedings between or affairs of a company. Such an article can not be called into play among the shareholders of the Company, the CLB can for the purpose of staying proceedings under section 397 or always entertain a petition under section 397/398 and will section 398. The provisions of sections 397 and 398 and of take an appropriate decision in the interests of the company, section 434 give exclusive jurisdiction to the court and the in the interests of the shareholders, in public interests, in matters dealt with thereby can not be referred to arbitration. No order to put an end to the matters complained of and it all arbitrator can possibly give relief to the petitioner under sections depends upon the facts of the case and no hard and fast rule 397 and 398 or pass any order under section 402 or section can be laid in this regard. 403". Again, on the same lines, it was reiterated by the Bombay September (A-349)1099 CHARTERED SECRETARY 2012 ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 30

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Mahesh A. Athavale*, FCS Anagha Anasingaraju, FCS Partner, Kanj & Associates Partner, Kanjmag & Co. Company Secretaries, Pune Company Secretaries, Pune

[email protected] [email protected] Arbitrability of Disputes Relating to Oppression and Mismanagement

This article tries to throw some light on the causes of section 397/398 disputes and the role of arbitration therein. It does not deal with the legal aspects of arbitration and its applicability or otherwise as regards matters before the CLB in respect of oppression and mismanagement but tries to deal with the unwritten and extra-legal aspects of arbitration qua oppression and mismanagement.

ay by day, the number, frequency and makes partners turn their back towards each other - intensity of disputes between the what is that turns them into bitter foes? business partners is increasing. More and more number of petitions are being filed This article tries to throw some light on the causes of section in the Company Law Board (CLB) under 397/398 disputes and the role of arbitration therein. It does not D section 397-398. In few cases it is deal with the legal aspects of arbitration and its applicability or observed that lust, greed and wrath are otherwise as regards matters before the CLB in respect of the reasons for such disputes. When two oppression and mismanagement but tries to deal with the or more persons come together to start a unwritten and extra-legal aspects of arbitration qua oppression business, the foundation is of mutual and mismanagement. faith, trust, joint efforts, hard work, sharing of responsibilities, and success. Arbitration Somewhere down the line, these aspects The Arbitration and Conciliation Act, 1996 defines the term take a back seat and the parties who "arbitration" as: any arbitration whether or not administered by have toiled together for years, may be permanent arbitral institution. Section 8 of the Arbitration Act decades - being together in ups and makes it clear that in case of existence of a binding arbitration downs - part ways - bitterly. What is it that clause in the agreement, the parties are required to refer the matter only to arbitration. However, in the absence of any binding agreement, the court may exercise its jurisdiction. There are a * Past President, The Institute of Company Secretaries of India. number of decisions of the Company Law Board in this regard - September to cite a few leading ones - Naveen Kedia v. Chennai Power 2012 CHARTERED SECRETARY 1100 (A -350) ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 31

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Professionals like Practising Company Secretaries play a very significant role in informal arbitration - by advising the parties at the first instance that it is more reasonable, economical and beneficial to resolve the disputes out of court. PCS can participate in meetings held jointly with both parties where parties arrive at a valuation on their free will and then the chances of adhering to such valuation automatically become brighter. Shares may be valued at a price at which the petitioner shall have an option to buy the respondents' shares or to sell his shares. This will ensure that the shares are valued in all fairness with equal opportunity to both sides. Even though this may not be 'arbitration' in its strict sense, the effect of the actions is the same - that of resolving the disputes between parties without resorting to litigation.

Generation Ltd (1999) 95 Comp Cas 640 (CLB-PB); Escorts mismanagement prejudicial to the public interest. The members Finance Ltd. v. G. R. Solvents and Allied Industries Ltd. (1999) 96 complaining of mismanagement under the section have to show Comp Cas 323. to the satisfaction of the CLB that the affairs of the company are For the purpose of this Article the term 'arbitration' is used in its being conducted in a manner prejudicial to public interest or in a colloquial sense - that of the method of putting an end to the manner prejudicial to the interests of the company. What is dispute between two or more persons with or without the prejudicial to public interest or to the interest of the company intervention of a third party. This includes conciliation and depends on the facts of the case. Lot of material and case laws is mediation. available to understand what conduct is oppressive or amounts to mismanagement. Arbitration, a form of alternative dispute resolution, is a legal technique for the resolution of disputes outside the courts, where Common grounds for disputes the parties to a dispute refer it to one or more persons (the A common pattern can be observed which runs through majority "arbitrators", "arbiters" or "arbitral tribunal"), by whose decision of the cases under oppression and mismanagement. The (the "award") they agree to be bound. It is a resolution technique common acts which are complained of in cases under sections in which a third party reviews the evidence in the case and imposes a decision that is legally binding for both sides and enforceable.

Thus, arbitration is guided by the principles of natural justice. It involves giving an opportunity of being heard to both the parties in dispute and putting an amicable end to the dispute between the parties so that both the parties are agreeable to the decision of the arbitrator in the larger scheme of things. Are the disputes under Oppression and Mismanagement Arbitrable? It is important firstly to understand the nature of disputes under oppression and mismanagement. The term 'oppression' is not defined by the Companies Act, 1956. Company Law Lexicon published by The University Book Agency Allahabad, 2000 Edition explains the word 'oppression' as: conduct which is burdensome, harsh and wrongful. Whether a particular act amounts to oppression or not depends on the facts and circumstances of the case. It involves acts which lack fairness and cause the prejudice to its members. The term 'mismanagement' is also not defined by the Act. Company Law Lexicon (supra) describes it as serious infighting among Directors of the company resulting in serious prejudice being caused to the company. Illegality of the constitution of the Board also amounts to September (A-351)1101 CHARTERED SECRETARY 2012 ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 32

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397 and 398 are:

(a) Not following the principles of partnership. Especially when the company is in the form of quasi Partnership.

(b) Changing composition of the Board of Directors by unilateral appointment of family members of respondents as directors to the exclusion of the petitioner/ without taking them into confidence.

(c) Allotment of further shares only to the respondent group at the exclusion of the petitioner group, so as to push the petitioner group into minority or to convert the petitioner group from majority to minority.

(d) Removal of the petitioners as directors of the company under section 284 or section 283 (1) g or other ground. (e) Ousting the petitioner from day to day management of the company.

(f) Giving humiliating treatment to the petitioners.

(g) Not granting inspection of books and records.

(h) Withholding salary, perquisites which were being paid to the petitioner.

(i) Diversification of funds for more risky ventures. One may have to look into a bit of psychology and philosophy. Right from Mahabharat days such disputes are going on and (j) Siphoning of money. conciliatory efforts even from a personality of the stature of Bhagwan Shrikrishna failed. (k) Depriving petitioner group from dividend but taking out money only by the Respondent group by taking out heavy salary. Many times the fighting groups are persons who start thinking together, working together as partners in a small partnership - toil The above list is only illustrative. It is saddening to see that these day and night - remain together even in adversities in the acts are done by persons who are not only business partners, but business and in each other's lives - enjoy the fruits of their hard sometimes even first degree blood relatives - be it brothers, work - and after few years - crack develops and they think that cousins, father- sons and spouses. they cannot continue to remain together and start knocking at Human Angle doors of the CLB / courts of law. What is it that drives people to courts against their own relatives, Matters are still worse in case of family owned companies. Cases close friends, partners? filed by and against father & son, brothers, Spouses - start washing dirty linen in public, fighting it out in the courts, allegations What is it that makes persons back stab their near and dear flying thick and fast from both sides! And this in turn adds fuel to ones? the fire, with parties not wanting to face each other - leave aside any discussions on the matter. Is it merely a greed for money and power? To analyze whether the disputes of oppression and Are these persons blinded by love for their generation next? mismanagement are arbitrable, it is important to understand the psyche and egos of the parties involved. What is it that the parties Is it jealousy and envy? are after, in such disputes? Are they fighting for any financial gain or only with a motive of teaching lesson to the other. If later is the Or is it all of this and more? case arbitration is difficult. September 2012 CHARTERED SECRETARY 1102 (A -352) ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 33

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Amicable resolution of the disputes becomes a possibility only CLB irrespective of whether oppression is proved or not - in the when the parties are willing to think logically and be reasonable. interest of the company, generally ask the petitioner about the Vindictive attitude and mindset of taking revenge makes the sum he expects to leave the company. Because merely deciding arbitration process evaporate. whether oppression or mismanagement exists or not, does not take any party anywhere. At times differences are so acute that It There have been occasions where family disputes like divorce is not possible for the parties to work together ever again. CLB cases have become the cause of filing of petition under section has powers to pass orders under section 402 of the Act even if no 397-398. In such scenario addressing emotional and sentimental case is proved under section 397-398 of the Act. There are aspects becomes too tough to be resolved. number of cases in which it has been held that the CLB may pass such order with a view to bringing to an end the matters Legal but unfair ? complained of, as it thinks fit even though a case of oppression/ It is now well settled that an action can be legal but still unfair. mismanagement has not been made out or the allegations of Minority often can raise objections on the decisions of the Majority oppression/mismanagement have not been established. which they feel oppressive even if they are otherwise legal. [Bharamgouda Adgouda Patil v. Sanjay Founders Pvt Ltd [2009] 92 CLA 165]. The Supreme Court in V S Krishnan v. Westfort Hi-Tech Hospital Ltd [2008] 142 Comp Cas 235 (SC), observed that: "The In Needle Industries (India) Ltd. v Needle Industries Newey (India) oppressive act complained of may be fully permissible under law Holding Ltd [1981] 51 Comp Cas 743; AIR 1981 SC 1298; 1981 but may yet be oppressive and, therefore, the test as to whether SCR (3) 698, it was observed by the apex court that even if the an action is oppressive or not is not based on whether it is legally case of oppression was not proved, substantial justice must be permissible or not since even if legally permissible, if the action is done between the parties and the parties must be placed as otherwise against probity, good conduct or is burdensome, harsh nearly as may be in the same position in which they would have or wrong or is mala fide or for a collateral purpose, it would been, if the wrong doing had not taken place. Similar view was amount to oppression under Sections 397 and 398." expressed in Sangramsinh P. Gaekwad v. Shantadevi P. Why disputes? Gaekwad (Dead) by LRs (2005) 123 Comp Cas 566 (SC). At times lack of communication breeds misunderstanding and Many times, instead of deciding the case on merits, compromise such misunderstanding leads to disputes. Once the dispute starts, is also suggested in the cases before the CLB where the it is difficult to bring the parties together for discussions. Arbitration petitioner is ready to exit the company at the price decided by the informally includes getting the parties to sit together and talk with court. This happens in most of the cases of the nature of Quasi each other and to arrive at a settlement which would be Partnership. Once parting ways is looked as the only way out the acceptable to all concerned. focus then shifts on only one aspect - Parting Ways Valuation of shares of the company Admittedly, since the onset of the dispute, it becomes very difficult Either suo-motu or at the request of the parties, the CLB may for the two warring parties to work together. Rather, in most appoint an independent valuer to value the shares of the cases, the petitioners are driven out of the company and ousted company. In such cases, the valuation of the shares is made from the day to day management and decision making. It is in the binding on both the parties. There are many factors to be taken interest of all concerned that one of the parties exits from the into consideration while valuing the shares of the company in business. Irrespective of the prayer before the courts, the only such cases. These among others, include the method of way forward in most of the situations is to part ways. Usually it is valuation, basis of valuation, date of valuation, whether any the minority which is required to exit the company although in allowances are to be made for the dispute and its effects on the exceptional cases, the courts may also ask the majority to exit the value of the shares. The courts have a very wide discretion in company. The parties arrive at a stage of thinking about determining the modes of arriving at a fair price. (Re, London compromise only after a prolonged battle before the courts, when School of Electronics, 1985 BCLC 273). a lot of water has already flown under the bridge - valuable time, energy and money has been spent at the cost of business, When both the parties agree to go for valuation by way of a sometimes even flourishing businesses are ruined and almost consent order, matters might appear to be simple, as long as both closed down - by the time the final verdict of the CLB/ courts is parties act upon their consent. In Unmesh Kantilal Shah v. received. Once the battle reaches the court room, the parties are Chemosyn Ltd. (2002) 4 Comp LJ 121 (CLB), consent order generally aware that one of them has to exit the business. Parties imposed obligations on both sides. The order directed that if one also start working out an acceptable sum for which they are ready party would not do his part, the other would not be compellable to to exit the business. September (A-353)1103 CHARTERED SECRETARY 2012 ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 34

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do his part. It was held that one party could not compel the other impact of the dispute on the value of the shares has been unless it had first done its part. Also, in Consulting Engineers considered or simply that the valuation favours the other party Services (India) Ltd. v. Kaikhosrou K. Framji, (2002) 4 Comp LJ more. 227 (Delhi), the CLB passed an order with the consent of the parties directing one to purchase the shares of the other without Arbitration - the way forward ! raising any technical objections. The party directed to purchase If the resolution of disputes lies in buying out the shares of the was not allowed to avoid the carrying out of the solemn promise minority and eventually that is what the minority also agrees to, it duly recorded by the CLB just only by raising hyper makes sense to take steps at the initial stages of differences and technical pleas. disputes - without approaching the courts, saving on time, energy, money and valuable relationships. This is nothing but arbitration - CLB has the power to order compliance of the consent orders. a way of resolving disputes out of court. The signs of dispute are Under the consent terms approved by the CLB one party was to visible to the parties much before the matter goes in the Court purchase shares held by the other party. The price was Rooms. If the parties exercise some restraint and think through negotiated before the CLB. No party could claim thereafter that the consequences of their actions, lot of hardship can be avoided. there was undervaluation or overvaluation of shares. Failure to The parties will be able to part on more amicable terms and discharge an obligation which was not a condition precedent to disputes will be resolved much quicker. the enforcement of the consent terms could not be brought into account for avoiding compliance. Bertrand Faure Professionals like Practising Company Secretaries play a very SitztechnikGmbh& Co. v. IFB Automotive and Seating Systems significant role in this form of informal arbitration - by advising the Ltd., (1999) 97 Comp Cas 690 (CLB-PB). parties at the first instance that it is more reasonable, economical and beneficial to resolve the disputes out of court. PCS can In Sir J P Srivastva & Sons (Rampur) P. Ltd. v. Gwalior Sugar P. participate in meetings held jointly with both parties where parties Ltd., (1999) 21 SCL 142, the parties agreed to a consent order arrive at a valuation on their free will and then the chances of under which the petitioner was to transfer his shares to the adhering to such valuation automatically become brighter. Shares respondent. The valuation was made by a chartered accountant may be valued at a price at which the petitioner shall have an appointed by CLB. The parties were held bound by the order and option to buy the respondents' shares or to sell his shares. This there was no scope for bringing in the fulfillment of any other will ensure that the shares are valued in all fairness with equal obligation which was not mentioned in the order. The rate per opportunity to both sides. Even though this may not be 'arbitration' share was fixed on the basis of the valuation report. Even in cases in its strict sense, the effect of the actions is the same - that of which are decided on merits and where oppression has been resolving the disputes between parties without resorting to established, the way forward for the company is that the litigation. This will save a lot of heartburn and of course, help the petitioners/respondents exit the company and in such cases, future of all concerned. It is observed that at times the Secretarial courts appoint valuers to determine the value of the shares of the Consultant ( PCS rendering advisory services as a retainer ) or a petitioner to exit the company. In cases of division of undertaking, Statutory Auditor can act as Arbitrator. This is possible if he valuation matters a lot. wins the confidence of both the sides and has established 'Fair valuation' his credibility. When is valuation said to be 'fair'? The answer to this question, if Prevention is better than Cure asked to the parties in dispute, is always different. Admittedly As a professional involved in the matters of a company, may be valuation is an art and not a science. It is subjective. A as a Company Secretary or a Chartered Accountant, one gets an professional valuer tries to bring maximum objectivity in the early indication of the possible disputes and disturbances. A valuation process. It takes lots of efforts to make the parties agree critical role has to be played by the professional. Needless to say to the given valuation. Either the respondents want the amount that he/she has to do his/her job with due care, attention and payable to the petitioner reduced by something which they allege diligence. is payable by the petitioner to the company; to which the petitioner does not agree. There have been number of cases where both If following is taken care of most of the disputes would be nipped sides do not agree to the valuation done by an independent at the bud. Professional. It is then for the court to intervene and pass a. Follow the law and procedures for change in composition of necessary orders to ensure completion of the transaction. Fair the Board of Directors or Shareholding pattern, in the spirit value may be expressed as a price as between a willing vendor and letter. and willing purchaser. Even after appointment of valuer, parties b. Issue proper Notices for the Board/General meetings, may have reservations about the method of valuation adopted, maintain attendance records, draft proper minutes, get these the factors that have been considered for valuation, whether the signed by the chairman. September c. Understand the concept of 'Quasi Partnership' and advise the 2012 CHARTERED SECRETARY 1104 (A -354) ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 35

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share price. It is desirable that the Respondents (normally who are running the show) should do the valuation.

3. Group A and Group B together appoint a valuer and based on his valuation either of the Groups decides to take an exit. It has to be pre decided in this option that valuation would be binding and that a specific Group will exit for sure at that valuation. The question about who is to exit can not be left open once the valuation is done.

4. Group A and Group B appoint independent valuers, pay the cost of valuation independently and then CLB decides the fair value.

5. Open Auction. Before a third person ( auctioneer ) both groups start calling the numbers indicating the value. The highest bidder gets the control of the company and loser needs to take stakeholders to follow 'DHARMA' of Partnership. an exit at a value attached to by the successful bidder. d. Keep in mind that something which is legal may not necessarily be fair. Try and do a thing which is legal as well as fair. 6. Reverse Open Auction. A third person (auctioneer) starts e. Do not dislocate the communication channel. In most of the calling numbers before both groups. He starts from a higher cases communication gap is a major contributor to the number and reduces it in stages. A particular group accepting disputes. a particular valuation confirms about its acceptance of that f. Concept of Mutual trust, faith and sharing responsibility should valuation then that group gets the 100% control of the be well understood by all the stakeholders. company and the other group needs to take an exit at a value attached to by the successful bidder. Few Suggestions for a Professional 7. Closed quotes: Both groups calculate the enterprise value of acting as a Mediator/Arbitrator the company (share value) put the number in a sealed a. One should not take sides of either of the groups of the Board envelop and hand over the sealed cover to an umpire. On a members / Shareholders. given date and in a given manner the envelops are opened b. Maintain professional independence in the process. and the person giving higher value will get a right to buy the c. Be unassuming. other side. d. Keep track of the discussions and decisions. e. Insist on formal settlement about rights, duties and functions 8. Sometimes paying value for shares may not be possible for of the stakeholders. both the groups, may be due to Cash crunch, then division of undertaking can be a good option provided the nature of Common methods of exit business permits such division. Assume that Group A is a minority group and has filed petition against Group B under section 397-398. Now the proposal is for 9. In case both groups are cash starved and cannot buy the compromise and one of the groups has to exit. other group, a possibility can also be explored for a third party Some of the options available for amicable settlement are as sell and sharing the consideration in proportion to the follows; shareholding. 1. Group A, values the business in his own manner & method. No questions asked by the Group B about valuation and thus If an amicable settlement does not take place and the deadlock share price. Then Group A lets Group B know the valuation. continues the only option that remains is winding up of the Then Group B will decide to sell or buy the shares at that company under section 433(f). This obviously is a loss of factors share price. of production and a waste of scarce resources for a developing country like India. All stakeholders especially workers suffer and 2. Group B, values the business in his own manner & method. hence all attempts should be made for settlement of disputes No questions asked by the Group A about valuation and thus through the process of Arbitration. share price. Then Group B lets Group A know the valuation. Then Group B will decide to sell or buy the shares at that September (A-355)1105 CHARTERED SECRETARY 2012 ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 36

Articles

T. K. A. Padmanabhan, FCS Managing Attorney Padmanabhan Associates Solicitors & Advocates New Delhi

[email protected] Arbitrability of Disputes Relating to Oppression and Mismanagement - Revisiting the Legal Provisions

Company law Board is a special Tribunal having very wide powers to prevent oppression and mismanagement in a company and to provide adequate relief to the complainant, which an arbitrator does not have. Even if there is an arbitration clause the arbitrator will not be able to give relief as specified under section 402 of the Companies Act and arbitration becomes illusory in such circumstances.

which mandates any judicial authority, before which a dispute has Ambit come, to refer the same to arbitration, provided parties have an e have two moot questions to answer, viz. agreement to refer disputes to arbitration. Though the Arbitration (i) Whether the Company Law Board Act does not contain any express or implied overriding provision (CLB) has powers to refer a dispute, to oust the effect of any other laws, vigorous attempts are being involving issues of oppression and made to give legal credence to this effect by resorting to section mismanagement under sections 397 and 8 totally overlooking the provision of section 2(3) of the Arbitration W 398 of the Companies Act, 1956, to Act which clearly and categorically saves the effect of other laws arbitration for adjudication and (ii) over the dispute resolution mechanism inspite of having an Whether parties themselves settle a arbitration provision. dispute involving issues of oppression and mismanagement under sections 397 There are numerous rulings of CLB as to on what grounds and and 398 of the Companies Act, 1956 circumstances a dispute under sections 397 and 398 of the through arbitration, without approaching Companies Act,1956 (Companies Act for short) could be referred the CLB? to arbitration. There is a solitary ruling of the Delhi High Court in which the court referred the dispute to arbitration exercising its Ever since the Arbitration and Conciliation Act,1996 inherent powers. Though the CLB also has such inherent power, (Arbitration Act for short) was enacted often attempts can it refer the matter to arbitration? If it does so, whether such are being made to resort to arbitration to adjudicate action would be construed as a refusal to exercise its jurisdiction upon disputes of various hues. The prime reason for over the reserved matters? this is the effect of section 8 of the Arbitration Act, Again the relief against oppression and suppression is available September under the Companies Act only when the eligibility conditions are 2012 CHARTERED SECRETARY 1106 (A -356 ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 37

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met by the complainant. If that be so, whether the Companies Act The CLB's duty, when a petition under impliedly permits the acts of oppression and suppression against persons who do not qualify to invoke sections 397 and 398? In section 397 is submitted, is to make other words, whether the right to complain and get remedy such order as it thinks fit to bring to an against oppression and suppression is absolutely denied to such persons or can they get relief under any other enactment, end the matters complained of. including the Arbitration Act? Likewise, the CLB's duty when a

These are the issues which are examined in this article in order to petition under section 398 is find out an answer to the questions posed at the commencement. submitted is to make such order as it thinks fit to bring to an end or prevent Dispute resolution under the matters complained of or the Companies Act The Companies Act is a special Act governing the incorporation, apprehended. management and dissolution of a company. In other words a company from womb to graveyard is governed by the provisions of the Companies Act. Various kinds of dispute resolution Arbitrability of Dispute machineries are provided in the Companies Act for adjudicating 'Arbitrability' refers to the capacity of the arbitrator to enter into and various kinds of disputes such as High Court, Company Law adjudicate upon the subject matter of dispute. There are certain Board, Securities and Exchange Board of India and the Central disputes which are beyond the realm of arbitration inspite of Government. The significant aspect of these various dispute covered under an arbitration agreement such as winding up of a resolution machineries is that they have exclusive jurisdiction in company4, suits for divorce or restitution of conjugal rights5, their sphere of activity. Again, as these authorities are created disputes about the appointment of a guardian for a minor6, under the statute, disputing parties have no choice of their own to disputes about taxation and public rates7,excepted contractual prefer any one to other. matters8. Dispute resolution under Understanding the importance of arbitrability, the Parliament has taken due care of the same under the Arbitration Act by the Arbitration Act specifically enacting Section 2(3) while dealing with the scope of Unlike the Companies Act, the dispute resolution machinery arbitration and making sections 5 and 8 subject to section 2(3). under arbitration procedure is not statutory but voluntarily created Therefore, where an Act specifically provides a dispute resolution and empowered by the disputing parties. The choice of arbitrator mechanism to resolve the disputes arising under such Act, or arbitrators, the procedure to be adopted, costs to be borne are arbitrator cannot arbitrate upon it. For example, Industrial determined as per the agreement between the parties. Once Disputes Act provides for Industrial Tribunal, labour court and there is a valid arbitration agreement between the parties to refer conciliation officers as dispute resolution machineries and hence disputes to arbitration, then by virtue of section 81 of the Arbitration labour disputes cannot be resolved by arbitration. Further, IDA Act, no other judicial authority can entertain the dispute and is provides for arbitration mechanism for which elaborate procedure bound to refer the parties to arbitration. However, this restriction is prescribed and arbitral award is also subject to the jurisdiction is subject to section 2(3)2 which provides that in case any law of the Industrial Tribunal. In effect, arbitration under the Arbitration prescribes a specific authority to adjudicate a specific dispute Act is ruled out. such dispute need not be resolved by arbitration. Therefore, the bar on a judicial authority to entertain a dispute, which contains Disputes as to Oppression arbitration, is not absolute but qualified to the extent prescribed under section 2(3) of the Arbitration Act. This is so because and Mismanagement section 53 of the Arbitration Act permits a judicial authority to Dispute relating to oppression is covered under section 397 and intervene in a dispute containing arbitration in a manner as dispute relating to mismanagement is covered under section 398 provided in the Act. of the Companies Act. The dispute resolution machinery is the

1 Section 8(1): A judicial authority before which an action is brought in a matter which is the 4 Haryana Telecom Ltd v.Sterlite Industries India Ltd, AIR 1999 SC 2354. subject of an arbitration agreement shall, if a party so applies not later than when submitting 5 Malka v. Sardar, AIR 1929 Lah 324. his first statement on the substance of the dispute, refer the parties to arbitration. 6 Sami Chetty v. AdaikalamChetty, AIR 1924 Mad 484. 2 Section 2(3): This Part shall not affect any other law for the time being in force by virtue of 7 Thorpe v. Cole 150 ER 158. which certain disputes may not be submitted to arbitration. 8 ViswanathSood v. UOI, AIR 1989 SC 952. 3 Section 5: Notwithstanding anything contained in any other law for the time being in force, in matters governed by this Part, no judicial authority shall intervene except where so provided in this Part. September (A-357)1107 CHARTERED SECRETARY 2012 ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 38

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CLB which is a special authority constituted under section 10E of the Companies Act. Section 399 sets out the eligibility criteria, based on numbers and shareholding percentage9, for a complainant to invoke the jurisdiction of the CLB in disputes relating to oppression and mismanagement. Section 402 provides for the various kinds of reliefs that can be granted by the CLB.

The cause of action for an aggrieved member to lodge a complaint with CLB, with respect to oppression, under section 397 is that the affairs of the company are being conducted in a manner prejudicial to public interest or in a manner oppressive to any member or members. Likewise, the cause of action with respect to mismanagement under section 398 is (i) that the affairs of the company are being conducted in a manner prejudicial to public interest or in a manner prejudicial that to the interests of the company or (ii) a material change has taken place in the management or control of the company, and that by reason of such change, it is likely that the affairs of the company will be conducted in a manner prejudicial to public interest or in a manner prejudicial to the interests of the company. appointed under the Arbitration Act.

The CLB's duty, when a petition under section 397 is submitted, CLB is the creature of a statute and has only such powers that are is to make such order as it thinks fit to bring to an end the matters conferred on it by the statute which created it. In other words it has complained of. Likewise, the CLB's duty when a petition under limited powers. Certain powers of the civil court are conferred on section 398 is submitted is to make such order as it thinks fit to it by virtue of section 10E (4C)10. Further CLB is deemed to be a bring to an end or prevent the matters complained of or civil court for the purposes of section 195 and chapter 26 of the apprehended. Cr.P.C and every proceeding before it is deemed to be a judicial proceeding within the meaning of sections 193 and 228 of the It is apparent from the language used in sections 397 and 398 that IPC. Therefore, the moot question naturally arises is whether what the legislature intended to remedy is "disputes relating to the CLB is a court for all purposes? affairs of the company" that may take colours of either oppression of members or mismanagement of the company. Thus the It has been observed, in an Australian case11, that a body of dispute complained of is not of a general commercial dispute but tribunal may be constituted entrusting them with work of judicial a dispute relating to the management of the company. This character but they are not courts in the accepted sense, though distinction is crucial because arbitration, in general, provides they may possess some of the trappings of the court. The phrase remedy for resolving commercial disputes and not any specific "trappings of the court" suggested that the tribunal may have disputes dealt with in any special statutes. Part VI of the many attributes which the court possesses, but still it will not be Companies Act, containing eight chapters and running from regarded as court and the following negative propositions were section 146 to 423, is with respect to the management and enumerated: administration of a company containing provisions as to various aspects of corporate management and administration of a "1. A tribunal is not necessarily a court in the strict sense company. Therefore, fairly it can be concluded that any dispute because it gives a final decision. arising out of or touching these provisions could well said to be 2. Nor because it hears witnesses on oath. dispute as to the "affairs of a company". 3. Nor because two or more contending parties appear before it between whom it has to decide. Status of the Company Law Board 4. Nor because it gives decisions which affects the rights of For the purpose of this article it is imperative to understand the powers of CLB vis-à-vis that of a civil court and an arbitrator 10 Conferred powers: a Discovery and inspection of documents or other material objects producible as evidence. 9 For companies having share capital: b Enforcing the attendance of witnesses and requiring the deposit of their expenses. (a).Not less than 100 members or 1/10th of total members of the company whichever is less [or] c Compelling the production of documents or other material objects producible as evidence and (b). Member or members holding not less than 10% of the issued share capital impounding the same. For companies having no share capital: d Examining witness on oath. Not less than 1/5th of the total members of the company. e Granting adjournments. f Reception of evidence on affidavits. September 11 Shell Company of Australia v. Federal Commissioner of Taxation (1931) AC 275. 2012 CHARTERED SECRETARY1108 (A -358) ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 39

Articles Arbitrability of Disputes relating to Oppression and Mismanagement - Revisiting the Legal Provisions

subjects. The Company Law Board, however, exercises the powers 5. Nor because there is an appeal to the court. conferred under the Act or in any other statute which confers a 6. Nor because it is a body to which a matter is referred by power on the Board to adjudicate upon a matter entrusted to it another body." under law or by the Central Government. Sub-section 4D of section 10E and regulation 47 of the Company Law Board Holding that the Central Government while exercising the Regulations, 1991 are the deeming clauses and treat the Board appellate power under section 111 of the Companies Act, as a court for this limited purpose. This, however, does not render functions as a tribunal and not as a court though it had the the Board an ordinary civil or criminal court. trappings of a court, the Supreme Court explained the distinction between a court and tribunal as under12 : The matters which are not within the jurisdiction of the Board are decided by the High Court or district court as provided under "All tribunals are not courts, though all courts are tribunals. section 10 and other provisions of the Act. The residue may go to The word 'courts' is used to designate those tribunals which the ordinary civil or some other competent authority. The Board are set up in an organised State for the administration of has to decide the matters placed before it in a judicial or quasi- justice. By administration of justice is meant the exercise of judicial manner equipped with certain powers which are judicial power of the State to maintain and uphold 'rights' and possessed by the courts but considering its scope, functions and to punish 'wrongs'. Whenever there is an infringement of a the special jurisdiction conferred on it, the Board can be held to be right or an injury, the courts are there to restore the vinculum only a tribunal and not a court." juris, which is disturbed. In view of the above, the well settled position is that the CLB is not By 'courts' is meant courts of civil judicature and by 'tribunals' a court even though it has trappings of a court and that its legal those bodies of men who are appointed to decide status is that of a special tribunal. controversies arising under certain special laws. Among the powers of the State is included the power to decide such Nature of jurisdiction of court controversies. This is undoubtedly, one of the attributes of the State, and is aptly called the judicial power of the State. In the under section 402 exercise of this power, a clear division is thus noticeable. In order to appreciate the issue as to whether an arbitrator would Broadly speaking, certain special matters go before tribunals, have the same extent of jurisdiction that of a court/CLB in the and the residue goes before the ordinary courts of civil matter of oppression and mismanagement so that he can also judicature. Their procedures may differ, but the functions are give the same relief as contemplated under section 402, it not essentially different. What distinguishes them has never becomes imperative to understand the nature and extent of been successfully established. Lord Stamp said that the real jurisdiction conferred under the court under section 402 of the distinction is that courts have 'an air of detachment'. But this is Companies Act. more a matter of age and tradition and is not of the essence, many tribunals, in recent years, have acquitted themselves so This issue came up before the Division Bench of the Bombay well and with such detachment as to make this test High Court14 in an appeal preferred against the order passed by insufficient." the Single Judge reconstituting the board of the company passed under section 402. After making an elaborate analysis of Chapter Following the above rulings and host of diverse judgments, a II and Chapter VI of Part VI of the Companies Act (relating to Division Bench of the Allahabad High Court had held that CLB is corporate management), the Court held as under: not a court even though it has trappings of a court as under13 : "Chapter II of the Act which includes section 255 deals with "Broadly speaking, the Company Law Board has the trappings of corporate management of a company through directors in normal a court in the sense that it has to determine a matter placed before circumstances, while Chapter VI , which contains sections 397, it judicially, give fair opportunity of hearing to the parties who may 398 and 402, deals with emergent situations or extraordinary be affected by the order, accept the evidence and also order circumstances where the normal corporate management has inspection and discovery of documents, compel the attendance of failed and has run into oppression or mismanagement and steps witnesses and pass a reasoned order which gives finality to its are required to be taken to prevent oppression and/or decision subject to right of appeal to a party under section 10F of mismanagement in the conduct of the affairs of the company. In the Companies Act,1956 or such other legal remedy which is the context of this scheme having regard to the object that is available under law to a party. sought to be achieved by sections 397 and 398 read with section

14 Bennet & Coleman & Co v. UOI (1977) 47 Comp Cas 92 (Bom).

12 Hari Nagar Sugar Mills Ltd v. Shyam Sunder Jhunjunwala (1961) 31 Comp Cas 387. 13 Prakash Timbers P. Ltd v. Smt.Sushma Shingla & Anr (1997) 89 Comp Cas 770 (All) September 2012 (A -359)1109 CHARTERED SECRETARY ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 40

Articles Arbitrability of Disputes relating to Oppression and Mismanagement - Revisiting the Legal Provisions

Both sections 397 and 398 use the word "may apply" and not "shall apply" with respect to the right of preferring an application by the aggrieved member before the CLB. Therefore it is important to establish, whether this aspect of the provisions of sections 397 and 398 are mandatory or directory.

402, the powers of the court there under cannot be read as orders and give such directions as it thinks fit to achieve the object subject to the provisions contained in the other chapters which and there would be no limitation or restriction on such power that deal with normal corporate management of a company. Further, the same should be exercised subject to the other provisions of an analysis of the sections contained in Chapter VI of the Act will the act dealing with normal corporate management or that such also indicate that the powers of the court under section 397 or 398 orders directions should be in accordance with such provisions of read with section 402 cannot be read as being subject to the other the Act." provisions contained in sections dealing with usual corporate management of a company in normal circumstances. The effect of the above ruling is clear that even though section 402 does not use the words 'notwithstanding anything contrary to The topic or subjects dealt with by sections 397 and 398 are such any other provisions of the Act' so as to clothe section 402 with that it becomes impossible to read any such restrictions or overriding powers, this ruling does so. This ruling was rendered limitations on the powers of the court acting under section 402. An when the issues under sections 397 and 398 were dealt with by examination of the aforesaid sections brings out two aspects; the company court. However, these powers were transferred to first,the very wide nature of the power conferred on the court, and, the CLB by the Amendment Act,1988 w.e.f. 31.5.1991 and secondly, the object that is sought to be achieved by the exercise therefore, CLB steps into the shoes of the court and by necessary of such power, with the result that the only limitation that could be implication has the same wide un-curtailed powers of the court impliedly read on the exercise of the power would be that nexus while passing an order under section 402. must exist between the order that may be passed thereunder and the object sought to be achieved by those sections and beyond But this does not apply to an arbitrator appointed by the parties, this limitation which arises by necessary implication it is difficult to as an arbitrator is neither a court nor a tribunal. Therefore, the read any other restriction or limitation on the exercise of the arbitrator will not have any powers to grant the reliefs court's power. Further, sections 397 and 398 are intended to contemplated under section 402 as such powers cannot be avoid winding up of the company if possible and keep it going conferred on him by the parties. This makes the position of an while at the same time relieving the minority shareholders from arbitrator inferior to CLB in as much as he will not be able to acts of oppression and mismanagement or preventing its affairs achieve the objects contemplated under sections 397 and 398 of being conducted in a manner prejudicial to public interest and, if the Companies Act. To achieve the objects of sections 397 and that be the objective, the court must have power to interfere with 398, wide powers as contemplated under section 402 is a must the normal corporate management of the company, and to and in this regard the arbitrator comes nowhere near the CLB. supplant the entire corporate management, or rather, mismanagement, by resorting to non-corporate management Status of arbitrator which may take the form of appointing an administrator or a Now let us examine the legal status of arbitrator as to whether he special officer or a committee of advisors etc., who would be in is a court or tribunal. Arbitration could be either 'consentient' i.e. charge of the affairs of the company. The court could even have agreed by parties or 'statutory' i.e. prescribed in a statute. In the a truncated form of corporate management if the exigencies of the former parties to a contract agree to resolve the disputes through case required it, any truncated form of corporate management arbitration while in the latter a particular statute prescribes that can never conform to all the provisions dealing with corporate disputes should be resolved through arbitrator named therein for management. It will all depend on the facts and circumstances of example Registrar of Cooperative Societies is the arbitrator each case as to how, in what manner and to what extent the court prescribed under the cooperative societies legislation to should allow the voice of the shareholders' directors on the board adjudicate certain disputes. Arbitration can be resorted to under of directors to prevail over that of the other directors and the the Industrial Disputes Act, 1947 also. We are specifically court's power in that behalf could not in any manner be curbed. concerned with consentient arbitration in this article. Therefore, the position is clear that while acting under sections 397 and 398 read with section 402 of the Companies Act, the The Arbitration Act prescribes certain standard procedures of court has ample jurisdiction and very wide powers to pass such arbitration in default of any contrary provisions agreed to between the parties. Thus, basically the arbitrator is the choice of the September parties i.e. 'chosen judge' and derives his authority under the 2012 CHARTERED SECRETARY 1110 ( A-360) ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 41

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arbitration agreement and not from any specific statute. The articles or any other agreement or any resolution which are parties are free to agree for the procedure to be adopted, method repugnant to the provisions of the Act and does not deal with the of proving documents etc. Thus, arbitration is a private provisions of other statutes, whereas section 5 of the Arbitration arrangement to resolve dispute without resorting to ordinary civil Act makes it clear that in case of an arbitration agreement, a courts. This is because the Arbitration Act does not override the judicial authority cannot intervene except as provided in that Act, provisions of special enactments under which certain disputes are notwithstanding anything contained in any other law. to be resolved by a specific authority constituted under such enactment. The Company Law Board being a judicial authority is bound, in terms of section 8 of the Arbitration Act to refer the parties to The distinction between a court, tribunal and an arbitrator came arbitration if the allegations arise out of the terms of an agreement up before the Supreme Court15, wherein the question was containing an arbitration agreement as defined in section 7 of that whether the decision of the arbitrator to whom industrial dispute is Act, notwithstanding the provisions of section 9 of the Companies voluntarily referred under section 10A of the Industrial Disputes Act. In other words, section 9 of the Companies Act does not Act, can be termed as a court. The Supreme Court had held as affect a right of a shareholder to invoke the provisions of section under: 8 of the Arbitration Act in case there is an agreement to refer the same to arbitration". "The arbitrator acting under section 10A of the Industrial Disputes Act is neither a court nor a tribunal even though some of the Even after making the above observation the CLB refused to refer trappings of the court are present. The arbitrator under section the parties to arbitration on other grounds (which will be discussed 10A of the Act is not in the same position as a private arbitrator. later). It is humbly submitted that the above observation appears He lacks essential and fundamental requisites in that he is not to be erroneous. Even if an arbitration agreement is covered invested with the State's inherent judicial power. He is appointed under section 7 of the Arbitration Act, it is still an ordinary basic by the parties and the power to decide the dispute between the agreement under the Indian Contract Act and is amply covered parties who appointed him is derived by him from the agreement under the sweep of the term 'agreement' used in section 9 of the of the parties and from no other source. The mere fact that his Companies Act and not a special agreement made pursuant to a appointment once made by the parties is recognised by section special legislation i.e. Arbitration Act. The main purpose of section 10A of the Act and, thereafter, he is clothed with certain powers 7 of the Arbitration Act is to define what an arbitration agreement having the trappings of the court, does not mean that the power is for the purpose of that Act and nothing more. Therefore an of adjudication which he is exercising is derived from the State". arbitration agreement does not acquire any special statutory right so as to become a statutory instrument so that it can go out of the The above position is squarely applicable to an arbitrator grip of section 9 of the Companies Act. appointed by parties in the ordinary course i.e. consentient arbitrator. In other words, an arbitrator is neither a court nor a REFERAL TO ARBITRATION tribunal. Let us now analyse the case laws under which disputes of oppression and mismanagement were referred to arbitration. STATUS OF ARBITRATION The Delhi High Court in the case of Gurnir Singh Gill & Anr v. Saz AGREEMENT International P. Ltd & Ors (1987) 62 Comp Cas 197, while The arbitrator's jurisdiction to adjudicate a dispute is basically referring the issue of ownership of shares between the warring derived from the arbitration agreement and as such, an parties to arbitration with their consent, held as under: agreement between parties to resolve disputes through arbitration in respect of disputes as to oppression and mismanagement will "The power to stay court proceedings (under section 34 of have to face the fate of being declared as null and void to such Arbitration Act,1940) because of the existence of an arbitration extent under section 9 of the Companies Act, even though such clause which has been, or can be, invoked or, for that matter of arbitration agreement is covered under section 7 of the Arbitration the existence of an award, is a matter of judicial discretion. The Act. court may well refuse to grant stay of the petition under section 397 and 398 which the parties have sought, and the court can In this regardit is appropriate to cite the observation to the contrary grant much wider and more appropriate relief. But this is not the made by the CLB in the case of 20th Century Finance Corporation same as saying that when a court is seized of proceedings under Ltd v. RFB Latex &Ors (1999) 97 Comp Cas 636 wherein it has sections 397 and 398, its powers do not extend to the reference been observed as under: of some or all the points in controversy to arbitration particularly when, in the course of proceedings, the parties agree to such "Section 9 of the Companies Act deals only with memorandum,

15 Engineering Mazdoor Sabha v. Hind Cycles Ltd, AIR 1963 SC 874. September ( A -361)1111 CHARTERED SECRETARY 2012 ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 42

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course. While a court may not, and indeed will not, agree to The CLB has no power at all to refer stultify its powers under section 397 to 403 merely because parties can have, or had, recourse to arbitration, there is no a dispute to arbitration if it finds that reason why the court's very wide amplitude of powers under no allegation complained of falls section 397 to 403 should be read down to prohibit the reference by it, some or all of the points in dispute before it, to arbitration. Its under sections 397 and 398 of the powers cannot be less in this regard to a civil court trying a suit Companies Act. In such between parties. circumstances the CLB has no Proceedings on a petition for relief against mismanagement and option but to dismiss the petition oppression under sections 397 and 398 of the Companies itself as such. Act,1956 are civil proceedings before a court and issues arising therefrom can be referred to arbitration, where the disputes raised is purely inter parties and do not affect the rights of strangers to Gurnir Singh's case referred the parties to arbitration even though the proceedings." it squarely fell under sections 397 and 398 of the Companies Act whereas the CLB referred the parties to arbitration (i) in Navin In the case of Naveen Kedia & Ors v. Chennai Power Generation Kedia's case without coming to a finding whether at all the Ltd & Ors (1999) 95 Comp Cas 640, the CLB referred the disputes allegations, prima facie, fell under sections 397 and 398 of the which arose between the parties out of two intrer-linked Companies Act so that it has jurisdiction to entertain the petition agreements, to arbitration on the ground that as a judicial and (ii) in Escorts's case even though there were allegations of authority it is bound to refer the parties to arbitration and has no oppression and mismanagement as it found it does not fell under discretion under section 45 of the Arbitration Act as it involves sections 397 and 398 of the Companies Act. However, in both the international arbitration. cases as a judicial authority it exercised its powers to refer the dispute to arbitration. The dispute was between two parties and the relief claimed was that one party be directed to provide funds to the company as Now an interesting question that arises is whether a judicial envisaged in the agreements. The warring parties were joint authority, who has no jurisdiction at all to entertain a petition venture parties with 50:50 share holding. The principal agreement alleging disputes that are subject matter of arbitration has power provided that the respective rights of the parties in the company under the Arbitration Act to refer the same to arbitration? In other shall be governed by the terms of the agreement and the words, should a judicial authority having no jurisdiction at all refer company and its shareholders agreed to this. The CLB was the dispute to arbitration or dismiss it. influenced by this clause and came to the conclusion that whatever the issues complained against is covered by the A careful reading of the language employed in section 8 read with agreement, which contains an arbitration clause. There was no section 5 of the Arbitration Act leads to the conclusion that, what finding or any observation whether the issues complained of in the is contemplated under these two sections is a lis which is capable petition also touches the provisions of the Companies Act so as of being adjudicated by a judicial authority which could be a Court to confer concurrent jurisdiction on it so that as a judicial authority or Commission or Board or Tribunal and also by an arbitrator. it can refer the dispute to arbitration. When such a lis comes before such a judicial authority he has but In the case of Escorts Finance Ltd v. G.R. Solvents and Allied to refer the dispute to arbitration. However, the above is subject to Industries Ltd & Ors (1999) 96 Comp Cas 323, the CLB referred the provisions of section 2(3) where the provisions of special laws the dispute, that arose out of sponsorship agreement, to are saved. arbitration holding that allegations such as failure to amend articles of association, failure to appoint nominee of the petitioners Therefore, in the humble view of the author, the CLB has no on the board of the company and the siphoning of funds etc. power at all to refer a dispute to arbitration if it finds that no directly arose from the sponsorship agreement and as such it has allegation complained of falls under sections 397 and 398 of the to be referred to arbitration and petitioners have failed to make Companies Act. In such circumstances the CLB has no option but allegations as to substantial acts or oppression or to dismiss the petition itself as such. mismanagement. In other words, the CLB was of the opinion that allegations contained in the petition were not relating to sections The ruling of the Delhi High Court rendered in Gurnil Singh's 397 and 398 of the Companies Act. case(supra) is no more a good law in view of the ruling rendered by the Supreme Court in Skypack Courier's case, which is All the above cases are distinguishable. The Delhi High Court in discussed herein after.The Supreme Court had come down heavily on the practice of courts/tribunals referring the maters to September arbitrator instead of deciding the same. In the case of Skypack 2012 CHARTERED SECRETARY 1112 ( A-362) ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 43

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Couriers Ltd v. Tata Chemicals Ltd. AIR 2000 SC 2008, the Cas 276 held as under: National Consumer Disputes Redressal Commission referred certain cases with the consent of the parties and certain cases "The shareholders right to file a petition under sections 397 and without the consent of parties to arbitration by a retired judge of 398 of the Companies Act,1956 is a statutory right which, by the Supreme Court on the ground that detailed evidence is section 9, cannot be ousted by a provision in the articles of required to be taken after scrutiny of various documents. This was association of the company. Any article providing that a difference challenged before the Supreme Court, which held as under: between the company and its directors or between the directors themselves or between any members of the company or between "The Commission under the Consumer Protection Act do not the company and any person shall be referred to arbitration have the jurisdiction to refer the dispute pending before it, for a cannot debar the jurisdiction of the court in the matter of a petition consensual adjudication by third person and then make the said under sections 397 and 398." decision of the so called consensual arbitrator, an order of the Commission itself. Section 22 of the Consumer Protection Act The above ratio was followed and reiterated in the case of O. P. provides that the Commission shall have the powers of a Court. Gupta v. Shiv General Finance (P) Ltd & Ors (1977) 47 Comp Cas These powers would include the powers to call for documents and 279 (Del) in which the court held as under: take evidence either by itself or on commission. However, the final adjudication has to be made by the Commission. There is no "An article providing for arbitration contained in the articles of provision in law which provides that adjudication of matters before association of a company cannot be called into play for the a Court/commission/Tribunal can be entrusted to a third purpose of staying proceedings under sections 397 and 398. The party/individual and the decision of the person then made a provisions of sections 397 and 398 and of section 434 give decree or order of a Court/Commission/Tribunal. Of course, an exclusive jurisdiction to the court and the matters dealt with award made by an arbitrator can be and is made a decree of a thereby cannot be referred to arbitration. No arbitrator can Court. But this is under the provisions of the Arbitration Act and possibly give relief to the petitioner under sections 397 and 398 or not de hors the Act. The Commission is referring matters to third pass any order under section 402 or section 403." person for consensual adjudication de hors the Arbitration Act. It is then making those awards the rule of the court by passing The Bombay High Court in the case of Manavendra Chitnis & Anr orders based on the award. The Commission is not applying its v. Leela Chitnis Studios P Ltd & Ors (1985) 58 Comp Cas 113 had own mind or adjudication on the disputes. It is merely putting its held as under: impremanitive on the decisions given by third parties. By doing "Merely because there is an arbitration clause or an arbitration this it is abdicating its own functions and duties. Such procedure proceeding, or for that matter an award, the court's jurisdiction is unwarranted and unjustified. It cannot be allowed to continue." under sections 397 and 398 of the Companies Act,1956 cannot stand fettered. On the other hand, the matters which can form the This authoritative ruling is squarely applicable to the CLB when it subject matter of a petition under sections 397 and 398 cannot be has to decide petitions under sections 397 and 398 of the the subject matter of arbitration, for an arbitrator can have no Companies Act. powers such as are conferred on the court by section 402."

Non-referal to arbitration The CLB refused to refer the parties to arbitration in the following Now let us examine the cases where the courts and the CLB cases. refused to refer the dispute to arbitration. The Delhi High Court in the case of Kare Pvt Ltd. (1977) 47 Comp September ( A -363) 1113 CHARTERED SECRETARY 2012 ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 44

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In 20th Century Finance's case (supra) and Khadwala Securities an arbitrator does not have. In this context, it appears that the Ltd & Ors v. KowaSpinning Ltd & Ors (1999) 97 Comp Cas the word 'may' is used in a mandatory sense. Therefore, to seek a CLB refused to refer the dispute to arbitration since some relief under sections 397 and 398 the affected shareholders will allegations which were independent of the sponsorship have to approach only the CLB and no other authority, including agreement, which an arbitrator could not adjudicate for want of a civil court. jurisdiction, could only be decided by it. In order to invoke the provisions of sections 397 and 398, the In the case of Das Lagerwey Wind Turbines Ltd v. Cynosure affected shareholder(s) must satisfy the eligibility condition. If they Investments Pvt Ltd (2004) 119 Comp Cas 411 it has been held do not satisfy the condition, they cannot approach the CLB. that the allegations made in the petition were independent of the Whether this means that oppression and mismanagement can subscription agreement and as such the dispute cannot be continue against such shareholder(s) who does not meet the referred to arbitration under the subscription agreement. eligibility criteria? No statute can have provisions that enable stifling the voice of minority and the Companies Act is no We have discussed only the decisions rendered by CLB on merits exception. Though the Companies Act provides for a dispute and there are many cases in which then CLB refused to refer the resolution mechanism for persons who meet the eligibility criteria, parties to arbitration on technical grounds. It appears that the CLB it has not shut the doors, for those who does not meet the had taken a stand under which it refuses to refer the dispute to eligibility criteria, to approach any other authority. In such case the arbitration if the allegations in the petition are independent of any affected person may well file a suit in the civil court and bring a agreement to refer to arbitration and/or allegations fall squarely civil action against the company and its management as a civil under sections 397 and 398 of the Companies Act. court can also grant similar reliefs as specified in section 402 by exercising its general and inherent powers, provided the Arbitration without complainant is able to satisfy the court. Even if there is an arbitration clause to resolve the issue, arbitrator will not be able to approaching CLB give the relief as specified under section 402, and since arbitration Both sections 397 and 398 use the word "may apply" and not becomes illusory in such circumstances there is no option but to "shall apply" with respect to the right of preferring an application resolve the issues through a civil court. However, no court ruling by the aggrieved member before the CLB. Therefore it is dealing with this type of issue has been reported yet. This issue is important to establish, whether this aspect of the provisions of yet to be tested in a court of law. sections 397 and 398 are mandatory or directory. In this angle,let us now examine the issue whether parties can resolve dispute pertaining to sections 397 and 398 among themselves through Conclusion the process of arbitration without approaching the CLB for relief. In the light of what has been discussed above, the answers to questions raised at the commencement are that– The cannons of interpretation of the word "may" as used in statutes are well settled and the context in which it is used i.e. (i) The Company Law Board cannot refer the dispute involving mandatory or directory has to be gathered from the intention of oppression and mismanagement under sections 397 and the provision and the objects it aims to achieve as the word 'may' 398 of the Companies Act to an arbitrator for adjudication. is generally an enabling word. Lord Blackburn had stated16 that (ii) The disputing parties themselves, who satisfy the eligibility the enabling words are construed as compulsory whenever the criteria under section 399, also cannot settle the dispute object of the power is to effectuate a legal right. A minority involving issues of oppression and mismanagement under shareholder has a legal right that his interests in the company are sections 397 and 398 of the Companies Act through well protected. Sections 397 and 398 provide for relief against arbitration. oppression of minority shareholders and mismanagement of the (iii) However, it appears that a disputing party who does not affairs of the company by majority shareholders and confers a satisfy the eligibility criteria under section 399, can settle the right on such minority shareholders to invoke the provisions of dispute involving issues of oppression and mismanagement sections 397 and 398 before the CLB and to get a relief under under sections 397 and 398 of the Companies Act by filing a section 402. suit before an ordinary civil court of appropriate jurisdiction. Even in such circumstances also the dispute cannot be We have seen that the CLB is a special tribunal having very wide settled by an arbitrator because he cannot provide the reliefs powers to prevent oppression and mismanagement of a as specified under section 402 of the Companies Act. company and to provide adequate relief to the complainant, which Thus the issue of arbitrability of a dispute relating to oppression 16 Julius v. Lord Bishop of Oxford, (1874-80) All ER Rep 43 (HL). and mismanagement is against the arbitrator and in favour of the September CLB or a civil court. 2012 CHARTERED SECRETARY 1114 ( A-364) ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 45

Articles

Aishwarya Singh Associate King Stubb & Kasiva Advocates & Attorneys New Delhi.

[email protected] Judicial View : Demystifying Arbitration in Disputes of Oppression and Mismanagement

Mere existence of an arbitration clause in an agreement does not bar the jurisdiction of the Company Law Board to entertain disputes relating to oppression and mismanagement. Judiciary has always encouraged arbritation since the results are faster than litigation.

INTRODUCTION In fact, it can be contended that CLB was constituted for addressing matters of oppression and mismanagement and it rbitral tribunal or Company Law Board must be the court of first instance for the same. Otherwise, it (CLB) - interesting arguments can be may lose its relevance. However, an unanswered question is - raised from both sides when facing a whether arbitration is legally barred in such matters? In other dispute regarding oppression or words, is it mandatory to pursue litigation and not arbitration in mismanagement by a company. If CLB when faced with oppression or mismanagement? This A supporting CLB, it may be argued that ambiguity not only confuses the aggrieved parties but also CLB has extensive powers under the the dispute resolution forums which may suffer the risk of further Companies Act,1956, to grant wide range delaying and frustrating the justice system. In order to bring of reliefs against oppression and clarity in this issue, this article is an assiduous attempt to mismanagement which is difficult for an demystify arbitrability of disputes regarding oppression and arbitrator, not being a statutory body nor mismanagement through in-depth analysis of judiciary's view. In having such statutory authority. To the order to further appreciate judiciary's binding opinion, we also contrary, if CLB comes to a conclusion propose a model which brings out the clear position on this that appropriate relief justified in a pertinent legal issue. particular case can be granted by an arbitrator, then, there is no reason why the LEGAL SCENARIO ON matter cannot be referred to arbitration. ARBITRABILITY: COMPANY LAW On similar lines, few may prefer arbitration over litigation in order to avoid delay and BOARD v. ARBITRAL TRIBUNAL costs involved in the latter. Contradictorily, "Nothing is more destructive of respect for the government and it may be contended that any dispute the law of the land than passing laws which cannot be enforced." regarding oppression and -Albert Einstein mismanagement is to be adjudicated by CLB alone in accordance with Companies So as to examine the legal aspects, one must analyze Act, 1956 and that there cannot be two forums for resolving the same matter. September ( A -365 ) 1115 CHARTERED SECRETARY 2012 ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 46

Articles Judicial View : Demystifying Arbitration in Disputes of Oppression and Mismanagement

fundamental laws regulating arbitration as well as proceedings Section 402 of the Companies Act read under CLB. Arbitration in India is regulated by Arbitration Act, with Sections 8 and 45 of the Arbitration 1996 ("Arbitration Act") whereas proceedings under CLB are controlled by Companies Act, 1956 ("Companies Act"). We will Act, arguably permits arbitration. Hence, first examine relevant provisions of the Arbitration Act followed we can safely conclude that arbitration is by that of Companies Act. not barred in cases of oppression and Arbitration Act, 1996 mismanagement. However, a cautious Section 8(1) of Arbitration Act, 1996 states as follows: study of Section 8 of the Arbitration Act "A judicial authority before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party seems to restrict litigation. In fact, it bars so applies not later than when submitting his first statement on judiciary from interfering in matters which the substance of the dispute, refer the parties to arbitration." are subject matter of arbitration. As a

On similar lines, Section 45 of Arbitration Act states that result, cloud of uncertainty continues to notwithstanding anything contained in the Code of Civil hover over the issue of arbitrability of Procedure, 1908 (5 of 1908), a judicial authority, when seized of disputes relating to oppression and an action in a matter in respect of which the parties have made an agreement, shall, at the request of one of the parties or any mismanagement by companies. person claiming through or under him, refer the parties to arbitration, unless it finds that the said agreement is null and (ii) any other director, void, inoperative or incapable of being performed. Hence, the aforementioned provisions seem to be lopsided (v) the manager, towards arbitration for resolution of a dispute on oppression or upon such terms and conditions as may, in the opinion of mismanagement. the CLB, be just and equitable in all the circumstances of the case; Companies Act, 1956 (e) the termination, setting aside or modification of any We must carefully examine other side of the coin as well. We agreement between the company and any person not note that Sections 397 (explains oppression), 398 (explains referred to in clause (d), provided that no such agreement mismanagement) and 402 (explains scope of power of CLB shall be terminated, set aside or modified except after due when resolving disputes of oppression and mismanagement) of notice to the party concerned and provided further that no Companies Act, are compressive legal provisions on such agreement shall be modified except after obtaining oppression and mismanagement. In fact, these provisions give the consent of the party concerned; very wide range of powers to CLB. More specifically, in terms (f) the setting aside of any transfer, delivery of goods, of Section 402 of the Companies Act, any order under either payment, execution or other act relating to property made Sections 397 or 398 may provide for- or done by or against the company within three months "(a) the regulation of the conduct of the company's affairs before the date of the application under section 397 or 398, in future; which would, if made or done by or against an individual, be deemed in his insolvency to be a fraudulent preference; (b) the purchase of the shares or interests of any members of (g) any other matter for which in the opinion of the CLB it is just the company by other members thereof or by the and equitable that provision should be made." company; Examination of the abovementioned provisions clearly indicate that CLB is the appropriate forum to resolve disputes (c) in the case of a purchase of its shares by the company as relating to oppression and mismanagement. However, they aforesaid, the consequent reduction of its share capital; nowhere specify that arbitration is barred in such matters. When Section 402 of the Companies Act read with Sections 8 and 45 (d) the termination, setting aside or modification of any of the Arbitration Act, arguably permits arbitration. Hence, we agreement, can safely conclude that arbitration is not barred in cases of howsoever arrived at, between the company on the one oppression and mismanagement. However, a cautious study of hand; and any of the following persons, on the other, Section 8 of the Arbitration Act seems to restrict litigation. In namely:- fact, it bars judiciary from interfering in matters which are subject (i) the managing director, matter of arbitration. As a result, cloud of uncertainty continues to hover over the issue of arbitrability of disputes relating to September oppression and mismanagement by companies. 2012 CHARTERED SECRETARY 1116( A -366 ) ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 47

Articles Judicial View : Demystifying Arbitration in Disputes of Oppression and Mismanagement

ROLE OF JUDICIARY IN DISPUTE INTERPRETING ARBITRABILITY When faced with a tussle between concerned provisions of Whether applicant is party No Companies Act and Arbitration Act, judiciary took the to arbitration agreement? responsibility of providing clarity on the issue of jurisidction. The Yes CLB has taken a firm stand by repeatedly saying in innumerable Whether arbitration No orders that dispute regarding oppression and mismanagement agreement is valid?

are bound to be referred to arbitration subject to certain Yes

conditions. In fact, it goes on to state that it has no discretion Whether matter covered in No under the Arbitration Act to refer or not to refer parties to arbitration clause?

arbitration. In Naveen Kedia v. Chennai Power Generation Yes 1 Limited , it was held that reference to arbitration was Whether certainty as to No 2 forum of arbitration? mandatory. In fact, CLB conducted a vast survey of authorities LITIGATION on the conflict between arbitration clauses and jurisdiction Yes under Sections 397 and 398 of Companies Act for prevention Whether dispute Yes involves strangers? of oppression and mismanagement to further bolster the same view.3 No Whether relegating for Yes arbitration at final hearing? In a similar order by CLB in Escorts Finance Ltd. v. G.R. No Solvents and Allied Industries Limited 4, it came to a conclusion Whether affected party No that when an appropriate relief justified in a particular case can applying for arbitration?

be granted by an arbitrator, then, there is no reason why Yes

the matter cannot be referred to arbitration. The CLB felt itself Whether appeal from CLB Yes to be bound to refer the parties to arbitration. order rejecting arbitration? No From the abovementioned case laws it can be implied that CLB will not immediately refer a matter to arbitration as soon as it is ARBITRATION established that there is a dispute and there is a valid arbitration agreement. Instead, it will consider and in its discretion decide in each and every case relating to a reference to arbitration whether appropriate relief can be granted by the arbitrator. 1) When not Party to What, thus, is implied is that the CLB may in appropriate cases Arbitration Agreement refuse to let the matter go to arbitration and decide the matter itself.5 Thus, as a general rule, disputes relating to oppression In Sumitomo Corporation case6, the Supreme Court considered and mismanagement will be referred to arbitration barring few disputes vis-a-vis the arbitration clause. The Supreme Court exceptions. The general rule and the exceptions are explained concluded that parties to the dispute were not parties to herein below through a diagrammatic presentation which is the arbitration clause. The Apex Court refused to refer the followed by accentuating upon each exception individually: parties to the arbitration on the ground that the Company therein was not a party to the arbitration agreement and hence 1 (1999) 95 Com Cases 640 (CLB-PB). the matter was not sent to arbitration. 2 Pinaki Das Gupta v. Maadhyam Advertising P. Ltd. (2002) 4 Comp LJ 318 (CLB); Khanwala Securities Ltd. v. Kowa Spgf. Ltd., (1999) 21 2) Invalid Arbitration Agreement SCL 269; 20th Century Finance Corporation Limited v. RFB Latex In Hind Samachar Limited Re,7 the CLB had refused to pass an Limited, (1999) 34 CLA 267; Sporting Pastime India Ltd., and others v. order of reference because there was no arbitration clause. Kasturi and Sons Ltd., (2007) 137 Comp Cas 821 CLB; Justice Similarly, in Shin-Estu Chemical Company case8, the Supreme Bhagwat, 'Law of Arbitration and Conciliations', 4th Edn., 2004; Vini Court laid down that while considering the application under Singh, 'Compulsory Mediation for Family Disputes', available at Section 45 of Arbitration Act, the court is required to make a http://www.arbitrationindia.org/pdf/tia_2_9.pdf (last viewed on August prima facie determination whether the arbitration agreement is 08, 2012). 3 A. Ramaiya, 'Guide to Companies Act', 3411, 16th Edn., 2004; (1999) 6 (2008) 4 SCC 91. 95 Com Cas 640 (CLB-PB). 7 (2002) 4 Comp LJ 1 (P&H). 4 (1999) 96 Comp Cas 323. 8 (2005) 7 SCC 234. 5 Jayant M. Thakur, 'Referring corporate disputes to arbitration', Indian Express Newspapers (Bombay) Limited (2000). September ( A -367 ) 1117 CHARTERED SECRETARY 2012 ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 48

Articles Judicial View : Demystifying Arbitration in Disputes of Oppression and Mismanagement

null and void, inoperative, or incapable of performance. If on a before CLB for nearly four years. prima facie determination, the court finds that the arbitration agreement is not null and void, inoperative or incapable of 7) when not applied by Affected Party performance, the parties would be referred to arbitration. After The CLB cannot make an order of reference for arbitration affording sufficient opportunity to the parties, where the court unless the affected party applies for it.13 arrives on a prima facie finding that the arbitration agreement is null and void, inoperative or incapable of performance, the court 8) Appeal from CLB order shall refuse to refer the parties to arbitration. The Supreme Court also held that when the court refuses to refer the parties rejecting Arbitration to arbitration, the court must give a reasoned order as to why When CLB rejected plea for arbitration in a matter of oppression the court is not referring the parties to arbitration. and mismanagement, the appellant appealed to High Court which also dismissed his plea. Consequently, the appellant 3) Matters not covered by appealed to Supreme Court requesting for arbitration. However, the Supreme Court held that appeal shall lie from the order of Arbitration Clause the CLB to the court authorized by law to hear the appeals. In Issues which are the subject matter of a petition and which are the event the order is passed by the CLB, the forum, which is not covered by the arbitration clause and, therefore, the provided under law for hearing the appeal from the order of the arbitrator could not go into them for want of jurisdiction, have to CLB, will be the appellate forum. In other words, while Section be decided by the CLB.9 50 of the Arbitration Act provides for the Orders which can be made the subject-matter of the appeal, the forum to hear the 4) Uncertainty as to Forum appeal is to be tested with reference to the appropriate law governing the authority or forum which passed the original for Arbitration order, that is, in the case on hand, the CLB. The Companies Act Where two agreements for the same transaction, namely, joint provides for such forum to hear the appeal from the orders of venture agreement and share purchase agreement, provide for the CLB as the High court within the jurisdiction of which the different arbitral tribunals, then, in the light of uncertainty registered office of the company in issue is situated. 14 regarding the contractual forum to which the parties are to be referred, the application is generally entertained by CLB and not referred for arbitration.10 Conclusion "When will mankind be convinced and agree to settle their 5) Involves Strangers difficulties by arbitration? " In a petition in Gurnir Singh Gill v. Saz International PO. Ltd.11 -Benjamin Franklin under Section 397/398 of Companies Act, it was held by the Delhi High court that courts may stay the petition in its discretion After analyzing the abovementioned model in details, it can be and refer all the issues or some of them to arbitration when the safely concluded that arbitration is always the preferred option if disputes raised are purely inter-parties and do not affect the the facts and circumstances are in consonance with the judicial rights of strangers to the proceedings. This view is further elucidations. However, one must not assume that proceedings bolstered by plethora of judgments. under Sections 397 and/or 398 are fettered by an arbitration clause15. In other words, mere existence of an arbitration clause 6) Being relegated for arbitration does not bar jurisdiction of CLB to entertain disputes regarding oppression and mismanagement subject to facts of at Final Hearing each case. Nevertheless, as stated earlier, when neither of the If parties have spent substantial time before CLB, then, dispute exceptions are hindering the arbitration process, the judiciary cannot be relegated to arbitration at the stage of final hearing. has always encouraged arbitration. This is because results of For instance, in Sudershan Chopra v. Company Law Board12, arbitration are much faster than litigation. It is a route of simple, the dispute was not referred to arbitration as it was being argued expeditious and inexpensive method of resolving disputes without lawyers and courts. In fact, large corporations enter into 9 Pinaki Das Gupta v. Maadhyam Advertising P. Ltd. (2002) 4 Comp LJ arbitration agreements on the faith that disputes will not suffer 318 (CLB); Khanwala Securities Ltd. v. Kowa Spgf. Ltd., (1999) 21 SCL 269; 20th Century Finance Corporation Limited v. RFB Latex Limited, the risk of litigation but quick settlement by arbitral bodies. (1999) 34 CLA 267. 10 Bhatia International v. Bulk Trading [2002] 2 SCR 411. 13 EIH Ltd. v. Mashobra Resort Ltd., (2002) 4 Comp LJ 133 (CLB). 11 (1987) 62 Com Cases 197 (Del). 14 Sumitomo Corporation v. CDC Financial Services (Mauritius) Ltd. and Ors. 12 (2004) 58 CLA 362 [P&H]. AIR 2008 SC 1594. 15 O.P. Gupta v. Shiv Finance (P.) Ltd., (1977) 47 Comp Cas 279 (Del); Kare September (P.) Ltd., Re, (1977) 47 Comp Cas 276 (Del). 2012 CHARTERED SECRETARY 1118 ( A -368 ) ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 49

Articles

Pramod S. Shah, FCS Pramod S. Shah & Associates Practising Company Secretaries Mumbai

[email protected] Arbitrability of Disputes Relating to Oppression & Mismanagement

Arbitration as an alternate dispute resolution mechanism provides speedy, efficacious and economical means for settling commercial disputes and is considered as a blessing for the litigants in the present over burdened Judicial System. Whether and to what extent disputes arising in a petition under section 397/398 of the Companies Act, 1956 alleging oppression and mismanagement, could be referred for arbitration is the issue that is examined in this article.

he subject of Arbitrability of Disputes officials and inherent complicated nature of cases apart from relating to Oppression & pendency of cases before the Company Law Board (CLB). Mismanagement gains significance in the light of the recent decision rendered Alternate dispute resolution (ADR) mechanism which provides by the Company Law Board in the quick, practical and economical settlement is considered as a T matter of Uninor Ltd. In April 2012, blessing for the present over burdened Judicial system. Almost Justice D. R. Deshmukh, Chairman, all the disputes including commercial, civil, labour and family Company Law Board has under Section disputes, in respect of which the parties are entitled to conclude 8 of the Arbitraion and Conciliation Act, a settlement, can be settled by an ADR procedure. 1996(the Act), allowed company's application seeking to resolve its dispute Arbitrability of Disputes with its joint venture partner, Telenor, a Section 8 of the Arbitration and Conciliation Act, 1996 (the Norwegian mobile phone company Arbitration Act) states that a judicial authority before which an through international arbitration in action is brought in a matter which is the subject of an arbitration Singapore. agreement shall, if a party so applies not later than when submitting his first statement on the substance of the dispute, It is seen that disputes relating to oppression and refer the parties to arbitration. The application shall be mismanagement under Section 397/398 of the accompanied by the original arbitration agreement or a duly Companies Act, 1956 (the Companies Act), often lead certified copy thereof. to compromise and settlement as such disputes are usually between family owned private limited Arbitration may be commenced or continued and an arbitral companies or where there is a joint venture. Although, award made even if the application under Section 8 is pending eventually such cases lead to compromise, the before the judicial authority. Section 45 of the Act states that proceedings consume lot of time, money and efforts to notwithstanding anything contained in Part I of the Arbitration reach the settlement. The reasons for such delay Act or in the Code of Civil Procedure, 1908 (5 of 1908), a judicial include conventional procedures, frequent transfer of September ( A -369 )1119 CHARTERED SECRETARY 2012 ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 50

Articles Arbitrability of Disputes Relating to Oppression & Mismanagement

authority, when seized of an action in a matter in respect of Section 8 of the Act should be made before making the first which the parties have made an agreement referred to in statement on the petition. In VLS Finance Ltd. v. Sunair Hotels section 44, shall, at the request of one of the parties or any Ltd., (2002) 111 Comp Cas 403 , GTP Granites Ltd. v. Aurora person claiming through or under him, refer the parties to Trading Co. Ltd., (2003) 41 SCL 1018 (CLB), the application arbitration, unless it finds that the said agreement is null and was not allowed because it was not filed before making the first void, inoperative or incapable of being performed. statement on the petition.

Section 46 of the Arbitration Act states that any foreign award The parties to the company petition and to the arbitration which would be enforceable under Chapter I of Part II (relating agreement should be same and the CLB should see to it that by to "enforcement of certain foreign awards") of the Act, shall be relegating the matter to Arbitration, the other issues and the treated as binding for all purposes on the persons as between subject matter will not remain unattended or unresolved [M/s whom it was made, and may accordingly be relied on by any of Bialetti Industries S.P.A v. Shri Rachit Suresh Gangar & Ors., those persons by way of defense, set off or otherwise in any CLB, Mumbai Bench Order dtd. 02/05/2012, CA NO.123 of legal proceedings in India and any references in this Chapter to 2011 in CP 48 of 2011]. Also by virtue of the provisions of the enforcing a foreign award shall be construed as including Arbitration and Conciliation Act, 1996, an order of the judicial references to relying on an award. The Supreme Court in authority under section 8 of that Act ordering the parties to make Kalpana Kothari v. Sudha Yadav, (2002)(1)SCC 203, held that a reference to arbitration or refusing to do so is not appealable. every judicial authority before which an action has been brought The same would hold good of an order of the Company Law in respect of a matter which is a subject matter of arbitration Board [Hind Samachar Ltd. Re, (2002) 4 Comp LJ 1(P&H)]. agreement is under a duty to refer such a dispute to the Matters which are the subject matter of a petition and which are mechanism agreed upon by the parties, and hence, the spirit of not covered by the arbitration clause and, therefore, the the provision as well as its true meaning has to be given due arbitrator could not go into them for want of jurisdiction, have to effect wherever the issue of reference under section 8 of the be decided by the CLB [Khandwala Securities Ltd. v. Kowa Spg. Arbitration Act is being brought up. Ltd., (1999) 21 SCL 269: (2000) 1 Comp LJ 104 (CLB-PB)].

Since this is a mandatory provision the core issue is whether all Object of Section 397/398 and disputes arising out of Joint Venture, Share Subscription/shareholders' agreement, Articles of Association Jurisdiction of CLB should be redressed by the process of arbitration alone or could Chapter - VI of the Companies Act, 1956 deals with oppression they be decided by any other Court or Tribunal. The Company and mismanagement and contains sections 397 to 409, Law Board conducted a vast survey of authorities on the conflict important sections being 397, 398, 399, 402 and 403. While between arbitration clauses and jurisdiction under Sections 397 section 399 deals with the qualification for approaching the CLB and 398 for prevention of oppression and mismanagement. for seeking relief under section 397/398, section 397/398 deal Under the old Act viz. Arbitration Act, 1940, the court had with the issues as to what constitutes oppression and discretion either to stay the legal proceedings and to refer the mismanagement and the powers of the CLB. While section 402 parties to arbitration, or to allow the proceedings to go on. Under is specific to the powers of Company Law Board, section 403 the 1996 Act there is no such discretion. The parties are bound deals with the scope of passing interim orders by the Company by their arbitration agreement and the court has no discretion to Law Board pending a main petition under section 397/398. relieve them of it. Accordingly, the CLB held in Naveen Dedia v. There are many precedents on the object and the scope of Chennai Power Generation Ltd., (1999) 95 Comp Cas section 397/398 of the Act. The powers of CLB under section 640(CLB-PB) : (1998) 4 Comp LJ 128 that proceedings under 397 are very wide and discretary, as the object of Section 397 sections 397 and 398 would become affected under the 1996 and 398 is to put an end to the matters "complained of" and "to Act by the existence of an arbitration clause. regulate the affairs of the company".

The CLB must see that the requirements of reference under Companies are formed based on the principle of rule of majority Section 8 of the Arbitration and Conciliation Act, 1996 (the Act) and due to benefits attached to it. Obviously, majority rule are satisfied. There should be binding agreement in existence prevails under Company Law with certain restrictions or [Vijay Kumar Chopra v. Hind Samachar Ltd., (2001) 2 Comp LJ limitations. While the majority is allowed to go ahead with their 133(CLB-PB-N. Delhi)]. The CLB cannot make an order of decisions for the overall benefit of the Company, the majority is reference unless the affected party applies for it. The CLB does not supposed to oppress the minority or mismanage the not have the power to stay the proceedings before it. It can only Company’s property. There should be proper protection to the order a reference. EIH Ltd. v. Mashobra Resort Ltd., (2000) 4 interests of every shareholder in a Company or the minority. Comp LJ 133 (CLB):(2002) 38 SCL 562. The application under When there is oppression or mismanagement in the Company, September despite other remedies, the most preferred remedy is to 2012 CHARTERED SECRETARY 1120 ( A-370) ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 51

Articles Arbitrability of Disputes Relating to Oppression & Mismanagement

approach the Company Law Board under section 397/398. The The Company Law Board, with certain Companies Act, does not define the term "oppression" and mismanagement". express limitations, exercises all powers in order to set the things in the Company right Oppression, according to the Dictionary meaning of the word, is and to prevent the acts of oppression and any act exercised in a manner burdensome, harsh and wrongful. The meaning of the term 'oppression' was explained by Lord mismanagement. In view of the Cooper in the Scottesh case of Elder v. Elder and Watson Ltd., complications and the stakes, a thus: "The conduct complained of should be at the lowest involve shareholder or a petitioner in a petition or visible departure from the standards of fair dealing and a violation of the conditions of fair play or which every shareholder under section 397/398 seeks immediate who entrusts his money to a company is entitled to rely." The relief. However, established procedure and Supreme Court in Shanti Prasad v. Kalinga Tubes Ltd. (1965) 35 legal principles cannot be overlooked. Comp Cas 351 held that the act of oppression must involve an element of lack of probity or fair dealing to a member in the matter of his proprietary rights as a shareholder. Agreement, AOA, etc. mainly relates to the management functions and control of the company where invariably the Sections 397 and 398 are intended to avoid winding up of the aggrieved person/group alleges non-compliance of the terms of company if possible and keep it going while at the same time the agreements and / or AoA. The allegations generally include relieving in minority. In Haryana Telecons Ltd v. Sterlite the following issues: Industries (India) Ltd (1999) 5 SCC 588, it was held that an l Non-appointment of directors nominated by the other group arbitrator, notwithstanding any agreement between the parties, or person-non filing of Form 32 with ROC would have no jurisdiction to order winding up of a company l Manner of utilization of funds since such power is conferred on a High Court by the l Deadlock in meetings Companies Act and referral of a winding up petition under l Utilisation of funds of the company without knowledge of Section 8 of the Arbitration and Conciliation Act was dismissed. other group, taking loans l Non-furnishing of minutes and or/financial information The Company Law Board, with certain express limitations, required by the other group or person exercises all powers in order to set the things in the Company l Implementation of projects without the consent of the other right and to prevent the acts of oppression and group mismanagement. In view of the complications and the stakes, a l Implementing project that is rejected by the other group shareholder or a petitioner in a petition under section 397/398 l Not sending the notice of meeting, non-provision of agenda seeks immediate relief. However, established procedure and of the meeting etc. legal principles cannot be overlooked. It is true that there should l Effecting changes in the shareholding pattern in detriment to be an effective remedy to the shareholders or the minority the other person or group shareholders when they approach the Company Law Board l Violation of the provisions of the articles of association showing oppression and mismanagement in the Company. But, inevitably, there are many technical things in the course of The Companies Act empowers CLB to decide the issues proceedings before the Board. Adjudication of corporate relating to oppression and suppression of minority by majority disputes under section 397/398 requires expertise and it's one and vice versa, mismanagement of the finances and affairs of of the reasons for establishing CLB/Company Law Tribunal. the company, non-registration of share transfers, rectification of members register, take inspection, etc. The CLB looks into the Sometimes, there may not be any need for the Board or the disputes raised and allegations made in the petition to ascertain Company Court to interfere and it may be enough if a particular whether the allegations relate to the violation of the contractual issue is decided among the shareholders with the process terms of the contract or any violation of the provisions of the Act agreed by them. At times shareholders may do forum-shopping and /or the AoA of the company. and may feel comfortable approaching the CLB though a particular dispute can be decided by a civil court. In such cases If the allegations pertain to the violation of the Statute or AoA or CLB can seriously look into the issues of Arbitration or refer the in relation to the rights of the oppressed person in his capacity dispute to the arbitration and need not entertain the application as a member of the company, then it refuses to refer the parties under section 397/398. to arbitration [Griesheim GmbH v. Goyal MG Gases Pvt Ltd, (2004) 62 CLA (CLB-Del)] More so, in a petition where The disputes under Section 397/398 of the Companies Act allegations pertain to oppression and mismanagement such arising out of Joint Venture Agreement, Shareholders September ( A -371) 1121 CHARTERED SECRETARY 2012 ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 52

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dispute cannot be referred to arbitration [Sudershan Chopra v. shares and the dilution of existing shareholding are normally CLB, (2004) 64 CLA 214 (P&H)]. The CLB refused to refer the construed as oppression. When a past member challenges the parties to arbitration in Gautam Kapur v. Limrose Engineering transfer of his shares by the majority in the Company and when and Lammertz Industriadel GmbH v. Altek Lammertz Needles the application is not maintainable if it is assumed that the Ltd. on the above reasoning. transfer by majority is legal, there will be complications as to The rationale of the CLB is legally sound because the whether the application itself is maintainable or not. We have Companies Act, 1956 is a special Act compared with the many precedents on this preliminary issue and it is complicated. Arbitration and Conciliation Act, 1996 where the latter Act is Normally, an adjudication before the Board under section general as far as arbitration is concerned and the former is 397/398 takes time and many disputes get settled in the special as far as violations of its provisions are concerned. process. The issue of proceeding against the legal Since the CLB is a special Tribunal specifically established to representatives of the majority is another complicated area to deal with and adjudicate on issues resulting in violations of the look into.Thus, even without going into the issue of oppression Act the provisions of arbitration would have no application to and mismanagement, there will be lot of complications in the determine such issues. Further, when the acts of the oppressor process and on preliminary issues like maintainability of petition infringe the rights of the oppressed such infringement or under section 397/398. violations cannot be adjudicated through the process of arbitration because violation of statutory rights is not the subject Scope of section 397/398 of arbitration agreement. For example, disputes relating to the statutory rights under the Rent control Act, Succession Act, of the Act Debt Recovery Act etc., cannot be adjudicated by arbitration but There are many precedents on the object and the scope of only by the special judicial authority prescribed under the section 397/398 of the Act. However, the reference made by the statutes. In other words, disputes arising out of violation of Bombay High Court, in Mauli Chand Sharma and another v. statutory rights and duties are not arbitrable disputes. Union of India and others, (1977) 47 Comp Cas 92 explains the To the extent possible, difference between the shareholding object and the scope of provisions dealing with oppression and groups in any Company is to be addressed and every effort is mismanagement. The court pointed out : to be made to ensure that the Company functions smoothly Chapter II of the Act, which includes section 255, deals with rather resorting to winding-up. The same is the object behind corporate management of the company through directors in constitution of BIFR and sections 391 to 394 of the Companies normal circumstances, while Chapter VI, which contains Act, 1956. It is more important to protect the interests of the sections 397, 398 and 402, deals with emergent situations or shareholders in a Company. At the same time the relations with extraordinary circumstances where the normal corporate foreign states cannot be ignored. There should be appropriate management has failed and has run into oppression or platform given to in case of cross border transaction to redress mismanagement and steps are required to be taken to prevent the grievances of aggrieved foreign investors. It is challenging oppression and/or mismanagement in the conduct of the affairs for the CLB to deal with the applications under Section 8 of the of the company. In the context of this scheme having regard Arbitration and Conciliation Act, especially keeping in mind to the object that is sought to be achieved by sections 397 and simultaneously the complications involved in matters under 398 read with section 402, the powers of the court under the Section 397/398, public policy, national interest, international sections can not be read as subject to the provisions contained trade policy, relations with foreign states and the principle of fair in the other chapters which deal with normal corporate and equitable justice. management of a company. Further, an analysis of the sections contained in Chapter VI of the Act will also indicate that the Complications under section 399 powers of the court under sections 397 and 398 read with Section 399 of the Companies Act, 1956 deals with the issue as section 402 cannot be read as being subject to the other to who can approach the Company Law Board under section provisions contained in sections dealing with usual corporate 397/398. It lays down a qualification. Among the minority group, management of a company in normal circumstances. every shareholder may not be able to pursue the issue before the Board against the Majority. As such, the provision talks Matters dealt with by sections 397 and 398 are such that it about consent of members in favour of applicant who signs the becomes impossible to read any such restriction or limitation on papers and presents the application to the Board under section the powers of the court acting under section 402. Without 397/398. We have precedents even on the issue of consent, the prejudice to the generality of the powers conferred on the court complicated thing being the precedent saying that the under these sections, section 402 proceeds to indicate what types shareholders giving consent should apply their mind as to why of orders the court could pass. Under clause (a) of section 402, they are consenting. the court's order may provide for the regulation of the conduct of A shareholder is a member of a Company. An illegal transfer of the company's affairs in future and under clause (g) the courts September order may provide for any other matter for which in the opinion of 2012 CHARTERED SECRETARY1122 ( A-372) ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 53

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the court it is just and equitable that provision should be made. An narration and precedents on what constitutes "oppression". examination of the aforesaid sections brings out two aspects; first, In view of number of precedents and the law of precedents, the very wide nature of the power conferred on the court, and a professional is often required to look at all the judgments secondly, the object that is sought to be achieved by the exercise under section 397/398 of the Act in order to substantiate the of such power, with the result that the only limitation that could be allegations or counter the Petition. Issue is not that much impliedly read on the exercise of the empower would be that simple as wording under section 397/398 and an order can nexus must exist between the order that may be passed not be passed in an application under section 397/398 thereunder and the object sought to be achieved by those without a detailed probe and enquiry. There is no need on sections and beyond this limitation which arises by necessary the part of the Companies to ignore the provisions of the Act implication it is difficult to read any other restriction or limitation on when their actions are legal. Again, it cannot be said that the the exercise of the court's power. mere non-compliance of provisions of the Act be construed Further, sections 397 and 398 are intended to avoid winding up of as "Oppression" and "Mismanagement". the company if possible and keep it going while at the same time relieving in minority shareholders from acts of oppression and Need for giving full particulars mismanagement or preventing its affairs being conducted in a manner prejudicial to public interest and, if that be the objective, and the consequence of failure the court must have power to interfere with the normal corporate There is a proposition and it is also expected that a Petitioner management of the company, and to supplant the entire who approaches the Board under section 397/398 of the Act corporate management, or rather, mismanagement, by resorting should give full particulars. Again, companies may not be able to non-corporate management which may take the form of to disclose everything for the reasons known. In such a case, appointing an administrator or a special officer or a committee of the issue of non-disclosure of certain facts and its bearing on advisers, etc., who would be in charge of the company. the adjudication of a petition under section 397/398 of the Act is really interesting to look into. Powers of CLB while entertaining A Petitioner or a professional dealing with an application under applications under section 397/398 section 397/398 should go through all the precedents under the There are plethora of judgments on the powers of Company Law provisions in order to understand the condition precedents for Board or the Tribunal under section 397/398 of the Act. While the maintaining an application under section 397/398 of the Act. precedents refer the wording under section 397/398 of the Act which confers widest powers on the Board, there exist complicated Events subsequent to issues. Basically, the plain reading of the provisions and the logical analysis makes it very clear that the powers exercised by the Board presenting a Petition under section 397/398 of the Act are preventive in nature. Then, When disputes arise among shareholders, they tend to do what should a shareholder do to get an illegality committed by the certain acts fearing at the protection of their respective majority undone? It's a very very complicated issue and scope of shareholdings. As such it is very often seen that shareholders remedial measures under section 397/398 of the Act is interesting commit certain things or act in a harsh way against their and the issue needs to be addressed. opponents even during the pendency of an application under section 397/398. This is very complicated issue having a Can a majority approach the bearing even on the entire adjudication process. Technically, the Petitioner before the Board should amend the Petition to Board under section 397/398 challenge the actions by the majority or the Respondents when Another interesting issue is how to construe "majority" under he wants to challenge the further illegalities committed by the section 397/398 of the Act and can the majority approach the majority even during the pendency of a Petition under section Board under section 397/398. The concept is that the majority 397/398. Company Law Board may not be in a position to pass controls the Company and they cannot be overtaken by the orders without any pleading warranting an amendment to the minority. But, there can be practical problems where the Petition and an additional pleading. minority controls the Company warranting interference by the adjudicatory forums like Company Law Board or the Tribunal. Disputed facts Company Law Board cannot overlook other general substantial What constitutes laws. For example, The Board should rely on the Contracts Act while deciding the validity of an "agreement" entered into by the "oppression"/"mismanagement"? Company apart from other provisions and the law. Normally, a 1. One can find any number of judgments dealing with the term challenge to agreements and contracts are decided after a full "oppression" under section 397 and can find so much September ( A -373) 1123 CHARTERED SECRETARY 2012 ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 54

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trial and it is the practice before Civil Courts. to be kept alive so as to incur further liabilities and to diminish the dividend payable in case of winding up to the existing Application of law of arbitration? creditors or the shareholders. There is a settled proposition that an Arbitration Agreement or a Their interests also have not to be sacrificed. It is therefore clause cannot oust the jurisdiction of Company Law Board or necessary that pending the hearing and final disposal of these the Company Court. But, the issue is not that simple. Some petitions, an arrangement ought to be made for the collection, times, there may not be any need for the Board or the Company realisation, preservation and maintenance of those assets of the Court to interfere and it may be enough if a particular issue is company which are in the possession of the company. It is also decided among the shareholders with the process agreed necessary that an investigation ought to be made into the affairs by them. of the company to find out if it is possible to resuscitate the company. It is only after such investigation that one can come Application of settled legal principles to a conclusion as to whether the company ought to be wound It cannot be said that the settled general legal principles are not up or whether it ought to be kept alive." applicable to a proceeding before the Board under section 397/398 and again it cannot be said that all the settled legal Law of Arbitration and section principles applies even to an application before the Board under section 397/398 of the Act. For example, it is very frequently 397/398 of Companies Act, 1956 seen that an averment or a dispute in an application under Many are of the view that certain issues can not be referred to section 397/398 of the Act, could have been the subject matter Arbitration and the Arbitration mechanism can not fulfill the before some other forum like Civil Court, but, still the Company object of certain legislations effectively; the apparent example Law Board cannot say that it will not look into the issue applying being the proceeding under section 397/398 of the Companies the principle of sub-judice. Differentiation has been made Act, 1956. All are aware of the complications in getting the between corporal rights and general civil rights. corporate disputes resolved and the complications in a proceeding under section 397/398 of the Companies Act, 1956. Public interest under section It is also very frequently seen now in a proceeding/petition under section 397/398 of the Companies Act, 1956, that an 397/398 of Companies Act 1956 application under section 8 of Arbitration and Conciliation Act, Dealing with the issue of public interest under section 397/398 1996 is being filed based on an Arbitration Clause asking for of the Companies Act, 1956 and the requirement on the part of reference of the dispute to the Arbitration. Already there is a the Company Law Board to look into many issues while perception among corporates that the remedy provided to the entertaining a petition under section 397/398 of the Companies shareholders when they are oppressed or the company is Act, 1956, The High Court of Bombay in Bhalchandra mismanaged, is not effective. Dharmajee v. Alcock, Ashdown and Co.Ltd 1972 (42) CC 190 was pleased to observe as follows: "(6) After the amendment of Why arbitration not advisable in sections 397 and 398 of the Companies Act by sections 10 and 11 of the Companies (Amendment) Act (LIII of 1963), it would section 397/398 cases appear that the affairs of the company have to be conducted not 1. Adjudication of a corporate dispute under section 397/398 only in the best interest of its members for their profit but also in requires expertise and that is also a reason for a manner which is not prejudicial to public interest. The element constituting "Company Law Board" or the "Tribunal" of public interest enters into the management of the companies especially under the provisions of Companies Act, 1956. after 1963. 2. A proceeding under section 397/398 can not be seen as a The modern corporation has become the accepted instrument proceeding between or among the shareholders only and it of social policy, because it affects a large part of the economic is the responsibility of the Company Law Board to look into life of the community. It is therefore necessary that pending the the functioning of the company, other shareholders, other hearing and final disposal of these petitions, an arrangement stake holders, rights of other third parties who are not ought to be made for the collection, realisation, preservation involved in the proceeding too apart from public interest. In and maintenance of those assets of the company which are in view of the scope of a proceeding under section 397/398 an the possession of the company. It is also necessary that an Arbitrator or an Arbitral Tribunal can not effectively deal with investigation ought to be made into the affairs of the company a case of oppression and mismanagement. to find out if it is possible to resuscitate the company. It is only 3. A proceeding under section 397/398 will normally be based after such investigation that one can come to a conclusion as to on a series of acts on the part of the majority in the Company whether the company ought to be wound up or whether it ought and as such no Arbitration clause can effectively cover the scope of allegations in a petition under section 397/398 of September the Companies Act, 1956. 2012 CHARTERED SECRETARY 1124 ( A-374) ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 55

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4. The object of the Company Law Board under section Supreme Court held that the power of the Court to grant relief in 397/398 is to 'put an end to the mattes complained of' and a petition under section 397 is of wide amplitude and that the in order to 'regulate the affairs of the Company'. In view of court can grant appropriate relief even if no case of oppression the scope of section 397/398 and the object, Company Law is made out. Board may simultaneously look into a particular issue though that particular issue is a subject matter of a Civil Suit In the recent judgement of the Supreme Court dated 14-3-2008 or some other proceeding. The object of section 397/398 is in MSDC Radharamanan v. MSDC Chandrasekhara Raja SLP- different from the scope of a Civil Suit or some other CNO. 5246 of 2007, 2007138 Comp Cas 897, Mad 2007 80 proceeding. SCL, where a father and son were equal shareholders in a company, relations soured between the two and the father, l Thus, it is likely that the object of section 397/398 and other though being the Managing Director, filed a petition for provisions of the Companies Act, 1956 may get defeated if oppression and mismanagement against the son who was the law of Arbitration is made applicable automatically or only other director on the Board and an equal shareholder. The mechanically. Without referring to any judgments on the Company Law Board did not find any case of oppression but issue, It is felt that the jurisdiction of the Company Law held that since the company was more in the form of a Board/Court/Tribunal under section 397/398 cannot be partnership with only two shareholders who were also directors taken-away unless the Company Law Board/Court/Tribunal and who could not function together, interest of justice could be feels that there is nothing wrong in referring the dispute to served if the son is directed to buy out the shareholding of the the Arbitration or the Tribunal based on the averments in the father. If the son did not purchase the shares within the Petition and other considerations. It is also true that, at specified period, the father thereafter had the right to purchase times, share holders will do forum-shopping and may feel the shares of the son. The son filed an appeal before the High comfortable approaching the Company Law Board though a Court. The High Court (though the father did not appeal against particular dispute can be decided by a Civil Court. This is the finding that there was no oppression) held, after going into where the Company Law Board can seriously look into the the facts, that the son was guilty of oppression and upheld the issue of Arbitration or referring the dispute to Arbitration and directions of the Company Law Board. The Supreme Court infact, logically, the Company Law Board need not entertain upheld this judgement of the High Court. The Bench of the an application under section 397/398 of the Companies Act, Supreme Court presided by S.B. Sinha, J. while upholding the 1956 at all as nothing prevents the parties to initiate the judgment of the High Court reiterated that even if no case of Arbitral proceedings simultaneously or the option of initiating oppression is made out the court can grant suitable relief. the Arbitration proceedings is always open to any party despite a petition under section 397/398 of the Companies Scope of Alternative Dispute Act, 1956 being dismissed. From any angle, the jurisdiction of the Company Law Board under section 397/398 of the resolution Methods Companies Act, 1956 need not be taken-way showing an The oppressive acts alleged by one party would not have Arbitration clause and if such a proposition is accepted, surfaced at all in the public domain, if there was a consensus then, the object of section 397/398 of the Companies Act, among the disputing parties. The effectiveness of alternative 1956 will get defeated. Its another complicated issue and to dispute resolutions like mediation/ conciliation lies at the initial be handled carefully despite the encouragement to the ADR stage of differences itself. The process and procedures of through Arbitration. specific tribunals like CLB are easier than normal Civil Courts, still it is cumbersome and time consuming. In the case of Judicial Review corporate disputes, the ongoing disputes will severely damage In Needle Industries' case 1981 AIR 1298, 1981 SCR(3) 698 the normal functioning of a company - its business gets the Supreme Court held that even if a company petition fails to affected, there will be damage to its image and goodwill. succeed and the complainant does not make out a case of oppression, the court is not powerless to do substantial justice We are living in a highly competitive environment and each between the parties. In Needle Industries case the Supreme business entity works hard to maintain its place. The valuable Court directed the Indian shareholders to pay the holding time and scarce resources are being wasted in unnecessary company a fair premium on the shares which were part of the legal battles - the results of which sometimes are uncertain. rights issue in which the holding company could not participate Even where specific protections/ provisions are available in the as the notice did not reach them on time. This direction was underlying law, one shall try to resolve the disputes through issued to meet the ends of justice though the Court clarified that informal methods wherein the interests of both parties are said direction was not the price of oppression, as there is no protected. Alternative dispute resolution methods will help not finding that the Indian shareholders were guilty of oppression. In Sangramsingh P. Gaekwad, AIR 2005 SCC 809 the September ( A -375) 1125 CHARTERED SECRETARY 2012 ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 56

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only to solve the differences of parties in a more convenient CLB can decline to refer the dispute to arbitration. method but it will keep the human relations out of damage to a great extent. Even on the orders of tribunals established for The judicial authority, prima facie, has to come to the specific purposes like CLB's as seen above, the aggrieved party conclusion, that the requirements of Section 8 or Section 45 may often prefer appeals to the High Courts and ultimately to have been fulfilled, before referring the parties to arbitration. By the Supreme Court. This again drags the solution and both the virtue of the mandate of the provisions of Section 8/45 of the parties will be bleeding heavily due to the time overrun and the Arbitration Act, once the ingredients of this section are satisfied, cost. Whereas under mediation, the differences can be solved then even the matters covered under section 397/398 of the on the basis of give and take policies of the parties on the Companies Act shall have to be referred to Arbitration in terms guidance of the mediator. As it is a voluntary settlement the of Section 8 or Section 45 as the case may be of the parties will honour their respective obligations than finding Arbitration Act. rescue provisions through repetitive appeals. Even matters which qualify to be a fit and proper case to complain of The Arbitration Act helps in speedy justice and decreases the oppression and mismanagement within the meaning of section load of litigation on Indian judiciary. However, it is very stringent 397/398 of the Companies Act, could be solved outside the so far as appeals are concerned. It does not provide for an legal forums particularly in situations where there is a appeal against an arbitral award, except on the grounds stated contractual obligation between the parties and the matters in Section 34(2).The Arbitration Act is also silent upon any alleged arise out of breach of contract or trust. qualifications that a person must possess to be appointed as an arbitrator. These provisions can lead to gross injustice to the A perusal of Section 7 of Arbitration and Conciliation Act, 1996 parties in serious matters like oppression and mismanagement would reveal that an 'Arbitration Agreement' means the in a company. agreement by the parties to submit the disputes (present or future) to arbitration and that it shall be in writing and signed by Lack of Awareness, the deterrent the 'parties'. Either party voluntarily refers the dispute to Lack of awareness about alternative dispute resolution methods arbitration or one of the aggrieved parties applies in the court of is the main reason why these have not found the required law to refer the same to an arbitrator. Section 8 stipulates that acceptability. More awareness should be created among the the party who claims the existence of arbitration agreement may public to encourage them to resort to alternative methods for apply 'not later than when submitting his first statement on the solving their disputes. The Arbitration and Conciliation Act, 1996 substance of the dispute', calling for the arbitration. For a judicial enables the certified tribunals to refer disputes to arbitration. authority to refer the parties to arbitration all the conditions However, many a times there are differences of opinion on stipulated in Section 8 have to be fulfilled. Such conditions are: selection of arbitrators and warrants the interference of High an action should have been brought before a judicial authority, Courts to appoint an arbitrator. It points to a direction where a the matter in action should be a subject of arbitration agreement change in the attitude of the people is required. Alternative and a party to the agreement should apply to the judicial Dispute Resolution Centers have to be established in all potential authority, such application should be made not later than when areas and the courts and tribunals should give more stress on submitting his first statement on the substance of the dispute. mediation and conciliation methods to create visibility of this the application has to be accompanied by the original or duly system and encourage people to approach the court as only the certified copy of the arbitration agreement. last resort and only after they exhaust other alternative methods.

Once all these conditions are fulfilled, the judicial authority is In the case of corporate disputes, the underlying legislations bound to refer the parties to arbitration. Proceedings under should provide for resolving disputes informally. Even the sections 397 and 398 are not outside the purview of the Memorandum and Articles of Association of companies should Sections 8 and 45 of the Arbitration and Conciliation Act, 1996. recognize the settlements reached through mediation, Once the CLB is convinced that matters governed in a petition arbitration and conciliation among the members where public under section 397/398 relate to or arise out of or is in connection interest is not affected and the informal dispute resolution with an arbitration agreement and the relief appropriate to the methods will be an effective remedy to the situation. Following facts of the case could be determined/granted by an arbitrator, disputes could be referred to arbitration: then, the CLB is bound to refer the matter to arbitration in terms l Disputes relating to Share Purchase agreements of the mandatory provisions of Section 8 or Section 45 of l Disputes in relation to Joint ventures between a company Arbitration Act provided that the Agreement is not null and void, and its joint venture partners inoperative or incapable of being performed. If any of the l Settlement of oppression and mismanagement by the Board requirements of Section 8 or Section 45 is not satisfied then of Directors of the Company l Disputes between Families & Relatives September l Other disputes depending upon the facts 2012 CHARTERED SECRETARY 1126 ( A-376) ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 57

Articles

Dr. K. S. Ravichandran, FCS KSR & Co. Company Secretaries Bengaluru

[email protected] Cases of Oppression and Mismanagement - A close look at the jurisdiction of CLB vis-a-vis an Arbitral Tribunal

Protection of minority rights enshrined under the Companies Act are statutory rights and the powers conferred upon CLB are statutory powers. Shareholders who are parties to an arbitration agreement can neither take away those statutory rights nor enter into any agreement ousting the jurisdiction of CLB nor can any other judicial forum or court exercise those powers specially conferred upon CLB.

hile the general rule is that the decisions Special Judicial Forum and of majority would prevail, such decisions can be challenged if they are oppressive Conferred Powers of the rights of shareholders or if the Sections 397 and 398 of the Act contain the most fundamental result of such decisions unfairly provisions dealing with oppression and mismanagement. W prejudice the minority shareholders or if Cases of oppression and mismanagement are adjudicated by a the conduct of the majority could be special quasi judicial forum styled as "Company Law Board" termed as unfair or lacking probity. In [CLB] constituted under Section 10E of the Companies Act, short, if the majority acts in a manner 1956 [the Act]. Sub-section (1A) of Section 10E of the Act states oppressive of the minority, minority that the CLB shall exercise and discharge such powers and could initiate a legal action against the functions as may be conferred on it, by or under this Act or any majority or those who are in the control other law. CLB enjoys only those powers and carries out only of the management of the affairs of the those functions that are conferred upon it. Section 402 and 403 Company. Of course, it is not of the Act confer upon CLB enormous powers under to grant uncommon to find cases where the suitable relief to parties to cases of oppression and majority gets oppressed in the hands of mismanagement. As per Section 10F of the Act, appeals the minority. Even in such against Orders of CLB could be preferred before the circumstances, the jurisdiction conferred jurisdictional High Courts. upon CLB comes handy. September ( A -377)1127 CHARTERED SECRETARY 2012 ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 58

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Arbitration Agreements - the Courts have time and again chosen mode of dispute resolution emphasized on legislative objective Agreements such as joint venture agreements, investment behind the enactment of ACA by agreements, share subscription agreements, shareholder rights agreement, share acquisition agreements, confer certain taking note of the need to minimize special rights upon promoters, sponsors, investors, acquirers, judicial intervention; ensure speedy certain specified shareholders or shareholder groups. Invariably, the covenants of such agreements are incorporated adjudication of disputes and reduce in Articles of Association also. Leaving aside possible questions grounds of challenge to arbitral challenging validity of such covenants under Section 9 of the Act, it must be noted that once incorporated into the Articles, awards. However even after more such covenants enjoy the benefit of Section 36 of the Act, than 15 years of enactment of ACA, whereby they bind not only the shareholders who are parties to the judicial canvass relating to any such agreements but also all other shareholders and also the company. When a covenant binds the company, arbitration still appears like a moon automatically it binds the Board of Directors also. Thus shine with a lot of grey areas. incorporating those covenants by altering Articles of Association creates valuable rights and binding obligations. Breach of covenants arising from deliberate non-compliance of Convention Awards. Part III relates to Conciliation. mandatory covenants and conditions and denial of rights enshrined in such agreements lead to disputes between parties Courts have time and again emphasized on legislative objective to such agreement. Such instances might constitute oppression behind the enactment of ACA by taking note of the need to also. Invariably, such agreements include 'arbitration' as the minimize judicial intervention; ensure speedy adjudication of chosen mode for resolution of disputes between parties. disputes and reduce grounds of challenge to arbitral awards. However in certain situations, invoking the jurisdiction of CLB by However even after more than 15 years of enactment of ACA, exercising statutory rights of shareholders under Section 397 the judicial canvass relating to arbitration still appears like a and 398 of the Act would appear to afford them a necessary moon shine with a lot of grey areas. relief than, or in addition to, adopting the agreed mode of dispute resolution. Answering parties [Respondents] in such In Electrosteel Castings Ltd. v Binay Prakash and Ors., proceedings would naturally invoke the provisions of Arbitration MANU/JH/0105/2008, in an appeal under Section 10F of the and Conciliation Act, 1996 [ACA] in order to put an end to or Act, the Jharkhand High Court held that "the finding of CLB that scuttle the proceedings before CLB. In such situations, conflict arbitration has not been intended by the parties to be the sole arises. Thus it becomes essential to have an indepth remedy or mechanism to resolve disputes arising out of or in understanding of the inter play between these laws and the connection with the agreement; is wholly untenable." applicable principles and propositions. Can Arbitration Agreement bar ACA - Courts must play a the jurisdiction of CLB? minimum role! Section 5 of ACA provides for the extent of judicial intervention ACA was enacted to replace the outdated Arbitration Act, 1940. in matters of arbitration governed by Part I and lays down that ACA consolidates the law and contains common and separate notwithstanding anything contained in any other law for the time provisions with respect to domestic commercial arbitrations, being in force, no judicial authority shall intervene except to the international commercial arbitrations and for enforcement of extent as provided in Part I. awards. It contains the law relating to conciliation also. It is based on the Model Law on International Commercial Section 8 of ACA states that if a Party to an Arbitration Arbitration adopted by the UN Commission on International Agreement approaches a Court or any other judicial authority Trade Law (UNCITRAL), 1985. ACA came into force from 16th [such as CLB] for adjudicating a dispute which should have August, 1996. Part I of ACA contains provisions relating to been resolved only through an arbitration process, the other domestic arbitration and domestic arbitral awards. Part II of party or parties [who are most likely to be the defendants or ACA contains provisions relating to enforcement of foreign respondents in such suit or other legal proceedings] have a awards, both New York Convention Awards and Geneva statutory remedy against any such abuse of process of law. Such party or parties who are aggrieved by such a suit or legal September proceeding may bring to the notice of the court or judicial 2012 CHARTERED SECRETARY 1128 ( A-378) ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 59

Articles Cases of Oppression and Mismanagement - A close look at the jurisdiction of CLB vis-a-vis an Arbitral Tribunal

authority about the existence and scope of the Arbitration "The expression 'first statement on the substance of the dispute' Agreement amongst the contesting parties. In such a case, the contained in Section 8(1) of the 1996 Act must be contra- court or other judicial authority such as the CLB would be bound distinguished with the expression 'written statement as used in to refer the parties to arbitration. In short, Section 8 enjoins upon Section 34 of the Arbitration Act, 1940'. It employs submission a court or judicial authority before which an action is brought, to of the party to the jurisdiction of the judicial authority. What is, refer the matter to arbitration, if the court or judicial authority is therefore, needed is a finding on the part of the judicial authority satisfied that it is a fit case to issue an order directing the parties that the party has waived its right to invoke the arbitration to suit or legal proceedings to arbitration. clause. If an application [under Section 8] is filed before actually The Supreme Court in P.Anand Gajapathi Raju and Ors. v. filing the first statement on the substance of the dispute, in our P.V.G. Raju (Dead) and Ors. MANU/SC/0281/2000, while opinion, the party cannot be said to have waived its right or examining the conditions under which Section 8(1) and (2) of acquiesced itself to the jurisdiction of the court". the ACA could be enforced, observed as under:- "The conditions which are required to be satisfied under sub- Timing of Application under sections (1) and (2) of Section 8, before the Court can exercise its powers are:- Section 8 of ACA 1) there is an arbitration agreement; The decision in Sudarshan Chopra and Ors. v. Company Law 2) a party to the agreement brings an action in the court Board and Ors. [2004] 52 SCL 429 (P&H), lays down the against the other party. proposition that a judicial authority cannot refuse to refer the 3) subject-matter of the action is the same as the subject matter to Arbitration [in pursuance of an application under matter of the arbitration agreement; Section 8 of ACA] even after the submission of the first 4) the other party moved the court for referring the parties to statement on the substance of the dispute if parties do not arbitration before he submits his first statement on the object to such application. substance of the dispute. In DR.G.L.Purohit v. Dr. S.S. Agarwal and Ors., [2011]163 In Sukanya Holdings Private Limited v. Jayesh H Pandya and Comp Cas 205(CLB-Delhi), decided on 05th August 2010, it Another AIR 2003 SC 2252, decided on 14th April 2003, the was held that the timing of the application under Section 8 of the Supreme Court had observed as follows: Arbitration and Conciliation Act, 1996, is an essential pre- l "For interpretation of Section 8, Section 5 would have no requisite to be considered for maintainability of such an bearing because it only contemplates that in the matters application. But by consent of the parties, the matter may be governed by Part I of the Act, judicial authority shall not referred to arbitration even after the submission of the first intervene except where so provided in the Act statement of the party before the judicial authority and, l Except Section 8, there is no other provision in the Act that conversely, by implication, if a party objects to the application in a pending suit, the dispute is required to be referred to the such a reference cannot be made. arbitrator l Further, the matter is not required to be referred to the Arbitral Tribunal, if 1) the parties to the arbitration agreement Commonality of Subject Matter have not filed any such application for referring the dispute For the purpose of invoking Section 8 of ACA, the matters to the arbitrator; 2) in a pending suit, such application is not complained of in a suit or other legal proceeding should be a filed before submitting first statement on the substance of matter covered by the Arbitration Agreement. The scope of the the dispute; or 3) such application is not accompanied by the Arbitration Agreement and the powers of the Arbitral Tribunal original arbitration agreement or duly certified copy thereof should permit adjudicating such disputes and granting the l This would, therefore, mean that the Arbitration Act does not reliefs prayed for. oust the jurisdiction of the Civil Court to decide the dispute In Spray Engineering Devices Ltd. v. Shree Saibaba Sugars in a case where parties to the Arbitration Agreement do not Ltd. and Another [2008] 145 Comp Cas 166 (CLB), the CLB, take appropriate steps as contemplated under sub-Sections upon finding that the matters complained of in the petition (1) and (2) of Section 8 of the Act" cannot be adjudicated without referring to the Arbitration Agreement, in its decision on 17/03/2008, held that nothing Section 8 of ACA vis-à-vis Section remains in the petition which could be tried by it.

34 of Arbitration Act, 1940 In this case, the CLB laid down the following legal propositions: Though Section 8 of ACA is in 'pari materia' with Section 34 of the Arbitration Act, 1940 [the predecessor of ACA], there are l Even otherwise, if a very little part, to be specific, some noticeable distinguishing features. In Rashtriya Ispat Nigam Ltd irregularities fall outside the scope of Arbitration Agreement, v. Verma Transport Company AIR 2006 SC 2800, decided on 08th August 2006, the Supreme Court held as follows: September ( A -379)1129 CHARTERED SECRETARY 2012 ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 60

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then for that little cause, the jurisdiction of the agreement l Where, however, a suit is commenced - "as to a matter" cannot be avoided by the petitioner because if some part of which lies outside the arbitration agreement and is also the dispute filed before the Court deserves to be referred to between some of the parties who are not parties to the the arbitrator then not only that part but the entire case must arbitration agreement, there is no question of application of be referred to the arbitrator, the concept of the half reference Section 8. The word 'a matter' indicates entire subject matter is highly unlawful as well as inconvenient of the suit should be subject to arbitration agreement l In other words, it has to decide whether there is a valid l It would be difficult to give an interpretation to Section 8 agreement and whether the dispute that is sought to be under which bifurcation of the cause of action that is to say raised before it is covered by arbitration clause the subject matter of the suit or in some cases bifurcation of l Where the allegations of Oppression and Mismanagement the suit between parties who are parties to the arbitration contained in the petition can be adjudicated without agreement and others is possible. This would be laying reference to the terms of the arbitration agreement the down a totally new procedure not contemplated under the question of referring the matter to arbitration does not arise Act. If bifurcation of the subject matter of a suit was [Conversely if the allegations cannot be maintained without contemplated, the legislature would have used appropriate referring to the Arbitration Agreement, CLB will direct the language to permit such a course. Since there is no such parties to have their disputes resolved through arbitration.] indication in the language, it follows that bifurcation of the subject matter of an action brought before a judicial authority In E-Logistics Private Ltd and Another v. Financial Technologies is not allowed (India) Ltd, [2007] 139 Comp. Cas. 311(CLB), in its decision on l Such bifurcation of suit in two parts, one to be decided by 26/12/2006, while directing the parties to arbitration, the CLB the arbitral tribunal and other to be decided by the civil court held that the grievances of the petitioner, though styled as acts would inevitably delay the proceedings of oppression and mismanagement in the affairs of the l The whole purpose of speedy disposal of dispute and Company, are directly flowing from the agreements and decreasing the cost of litigation would be frustrated by such therefore, those disputes cannot be adjudicated in the present procedure. It would also increase the cost of litigation and proceedings, without any reference to the terms of the harassment to the parties and on occasions there is agreements. possibility of conflicting judgments and orders by two different forums In Garden Finance Ltd. v. Prakash Inds. Ltd. and Anr. AIR 2002 Bom 8, decided on 24th April 2001, the Bombay High Court held that "if there is no identity of subject matter of the suit and Existence of Arbitration Agreement the arbitration agreement, Section 5 of the Arbitration Act would In Prakash K. Raghavendra Rao v Sriram Transport Finance also not come in the way of this Court entertaining the Co. Ltd. and Anr, AIR 2008 Ker 234, the Kerala High Court, present suit". while disposing of a writ petition, held that "the enquiry contemplated under Section 8(1) of the Act is only to find out In Sukanya Holdings case cited supra, Supreme Court held as whether the agreement produced by one of the parties is an under: agreement executed by the parties. If it is admitted by the parties that it is an agreement, no other evidence is necessary. l There is no provision in the Act that when the subject matter Then what is to be looked into is whether the agreement of the suit includes subject matter of the arbitration contains an arbitration clause. If one party produces an agreement as well as other disputes, the matter is required agreement and the other party disputes the execution of the to be referred to arbitration. There is also no provision for agreement, Court has to enter a finding whether the agreement splitting the cause or parties and referring the subject matter so produced was executed by the parties or not. It could be by of the suit to the arbitrators recording necessary evidence or based on the affidavits or l Thirdly, there is no provision - as to what is required to be other sufficient materials. If it is found that the agreement done in a case where some parties to the suit are not parties produced is the one executed by the parties, and its execution to the arbitration agreement is not vitiated and that agreement contains an arbitration clause, l The relevant language used in Section 8 is -"in a matter Court shall refer the parties to arbitration, as provided under which is the subject matter of an arbitration agreement". [If it Section 8(1)." is so the] court is required to refer the parties to arbitration. Therefore, the suit should be in respect of 'a matter' which Serious Allegations of Fraud and the parties have agreed to refer and which comes within the ambit of arbitration agreement Manipulation of Accounts In N. Radhakrishnan v. Maestro Engineers and Ors., September (2010)1MLJ401(SC), the Supreme Court quoted with approval 2012 CHARTERED SECRETARY 1130 ( A-380) ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 61

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granted to a plaintiff cannot be (mis)used as a gate pass to avoid an Arbitration Agreement. In Ministry of Sound International Ltd. v. Indus Renaissance Partners Entertainment Pvt. Ltd.156 (2009) DLT 406, the Delhi High Court held that courts may in a given case examine the question with reference to substance and not merely form of plaint, lest in a case a plaintiff may deliberately, intentionally introduce parties to get over the arbitration agreement. Each case, therefore, has to be scrutinized carefully.

Company should be a Party In proceedings before CLB, invariably the company, in relation to the affairs of which a petition under Sections 397 and 398 is filed, should be the first respondent. Courts have rejected applications under Section 8 of ACA if it is found that the company is not a party to the Arbitration Agreement in question. That is one of the reasons why the company is invariably added as a party in contracts relating to the affairs of a company.

In Enercon GMBH v. Enercon (India) Ltd [2008] 143 Comp Cas the decision of the Madras High Court in Oomor Sait HG v. 687 (CLB), while dismissing respondents' application under Asiam Sait, 2001 (3) CTC 269 wherein it was held that "Civil Section 8 of ACA, the Principal Bench of CLB held that Court can refuse to refer matter to arbitration if complicated "considering the fact that the company is not a party to SHA and question of fact or law is involved or where allegation of fraud is that some of the allegations cannot be traced to the terms of made....Allegations regarding clandestine operation of business SHA ………. the application (under Section 8 of the Arbitration under some other name, issue of bogus bills, manipulation of and Conciliation Act, 1996) is not maintainable". accounts, carrying on similar business without consent of other partner are serious allegations of fraud, misrepresentations etc., In Dr. G. L. Purohit v. Dr. S.S. Agarwal and Ors., cited supra, and therefore application for reference to Arbitrator is rejecting an application praying for a direction to refer parties to liable to be rejected." arbitration, the CLB observed that "the Company in relation to the affairs of which the Company Petition has been moved is Commonality of Parties not a party to the Arbitration Agreement". A party who applies to a court or any other judicial authority Abandonment of Arbitration - under Section 8 of ACA must show that all the necessary parties to the suit or legal proceedings are parties to the Conduct of Parties is Crucial Arbitration Agreement and as aforesaid the subject matter of the In Bharati Televentures Private Ltd v. DSS Enterprises Private suit or other legal proceeding relates to a matter covered by the Ltd and Ors. 123 (2005) DLT 532, it was held that once a party arbitration agreement and hence the matter must be referred to has invoked the jurisdiction of a civil court, it cannot arbitration. Courts have deprecated the tendency to scuttle the subsequently rely upon the arbitration clause. Once jurisdiction above requirement by addition of some parties [who may not be of the civil court is invoked by a party, it would tantamount to necessary party or against whom no relief would have been abandonment of the arbitration clause. However in the said sought]. case, the defendant Nos.1 and 2 had invoked the arbitration clause by filing an application and have been pressing the In Sundaram Brake Linings Ltd v. Kotak Mahindra Bank Ltd., present application. Subsequent to filing of the present M.S. Subramanian and G. Manikandan, (2010) 4 Comp LJ 345 application, defendant Nos. 1 and 2 had filed a civil suit but the (Mad), in a decision on 24/07/2008, the Madras High Court held said suit was withdrawn. Taking a note of the same the High that the decision of the Supreme Court in Sukanya Holdings Court held that mere filing of the civil suit in the present case will cited supra does not lay down as a proposition of law that the not amount to abandonment or waiver of the right to invoke moment a person who is not a party to an Arbitration Agreement arbitration. The High Court had observed that if the defendants is roped in, the jurisdiction of the Arbitral Tribunal stands ousted. had first filed the civil suit and thereafter their application In a Civil Suit, the plaintiff is the dominus litus and he may cite any one as a party, at the time of institution. Such a privilege September ( A -381)1131 CHARTERED SECRETARY 2012 ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 62

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for referring the matter to arbitration, it would have been a The rights of shareholders to different issue. seek remedy against acts of In Sudarshan Chopra and Ors. v. Company Law Board and Ors. [2004] 52 SCL 429 (Punj & Har), after taking note of the oppression and various applications taken out by the Group A revealing that the mismanagement are statutory substance of the dispute, the Punjab and Haryana High Court had held that "Group A had not only abandoned its claim to rights while rights of parties to seek arbitration but had even otherwise forfeited this right as it an Arbitration Agreement are had not submitted to arbitration before it had filed the first substance of its claim before the Company Law Board". contractual in nature. Differences between which indicates their intention not to proceed with the arbitration. On the facts and circumstances of the case and in view of the Section 8 and 45 of ACA pitched battle of litigations between the parties, the learned There is a substantial difference between Section 8 in Part I single Judge rightly held that there is a waiver by estoppel and relating to domestic arbitrations and Section 45 in Part II relating that the arbitration clause in JVA has become "inoperative". The to international commercial arbitrations. Section 8 of ACA does said conclusion is based on materials on record warranting no not envisage any role to a court or other judicial authority to look interference. We do not find any ground for interference with the into the aspect validity or otherwise of an arbitral agreement. order of the learned single Judge." However under Section 45, before directing parties to arbitration, the Court has to satisfy itself that the Arbitration Appeal against orders of CLB / Agreement has not become null and void, inoperative, or incapable of being performed. There is thus a substantial Courts under Section 8 of ACA difference between the burden on the court under Section 8 in Section 37 of ACA makes it very clear that only those orders which relation to domestic arbitrations and under Section 45 of ACA are specified in that section are appealable orders. Section 37 of relating to international commercial arbitrations while deciding a ACA clearly provides that an appeal shall lie to the court question whether to direct the suit parties to arbitration or not. authorised by law to hear appeals from original decrees of the Section 45 of the Act does not refer to filing of first statement or court passing the order under appeal. An order of a Court or written statement or a request for filing of written statement. Tribunal or CLB under Section 8 of the ACA is not mentioned in Section 37 of ACA at all and therefore there is no appeal against Multiple Legal Proceedings may any order of any Court or Tribunal or CLB under Section 8 of ACA. render the Arbitration A Division Bench of Delhi High Court in Tandav Film Entertainment Pvt. Ltd. v. Four Frame Pictures and Anr. 2010 Agreement inoperative (114) DRJ 219, while deciding the question whether an appeal C.G. Holdings Private Limited and Ors. v. Ramasamy Athappan would lie against an order passed by a Court under Section 8 of and Nandakumar Athappan and Ors. [2012] 170 Comp Cas 93 ACA, held that Section 8 of the 1996 Act is peremptory in (Mad), was a case where both the parties had moved the CLB nature. The Court further held that where an arbitration with their own petitions under Sections 397 and 398 of the Act. agreement exists, the Court is under obligation to refer the The Appellants before the Madras High Court had moved the parties to arbitration in terms of the arbitration agreement. The Arbitral Tribunal constituted by the International Chamber of Court further held the appeal filed against the order referring the Commerce for commencing an international commercial disputes to the arbitration and dismissal of the suit is not arbitration. In view of multiplicity of proceedings before various maintainable. courts including those before the CLB, the division bench of the Madras High Court had confirmed the anti arbitration injunction In Maruti Clean Coal and Power Limited v. Kolahai Infotech Pvt. granted by a single judge confirming the finding that the Ltd. and Ors., MANU/DE/1387/2010, decided on 06th May Arbitration Agreement had become inoperative. 2010, it was held that the inevitable inference is that the appeal against an order passed by the Single Judge under Section 8 of In the said case, the Division Bench of the Madras High Court the Arbitration and Conciliation Act, 1996 is not maintainable. held as follows: Appeal against orders of CLB / "The waiver is clearly implicit from the acts of the Appellants, Courts under Section 45 of ACA September While Section 37 of ACA applies to appeals against orders 2012 CHARTERED SECRETARY 1132 ( A-382) ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 63

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under Part I, Section 50 of ACA applies to international Rs.27 crores to Rs.53 crores, further allotment of shares of arbitrations covered by New York Convention. Section 50 of Rs.25 crores without meeting the requirements of the Act, loss ACA stipulates that an appeal shall lie against an order refusing of substratum of the Company on account of the attachment, by to refer the parties to arbitration under Section 45 or to enforce the Income Tax Department of the bank accounts/deposits an award under Section 48 of ACA. Section 50 of ACA clearly amounting to Rs.25 crores parked illegally by the second provides that an appeal shall lie from the order refusing to refer respondent and several statutory violations committed by the the parties to arbitration under Section 45 of ACA to the Court respondent group, are neither directly covered by nor emanated authorised by law to hear appeals from such order. from the agreement dated 19.07.2004."

In Sumitomo Corporation v. CDC Financial Services (Mauritius) In the said case, affirming the decision of CLB that the power Ltd. and Ors., AIR 2008 SC 1594, the Supreme Court held as vested under the Act to deal with the Company Petition follows: preferred under Sections 397 and 398 read with 402 and 403 of the Act is available to the CLB to deal with the Company Petition "While Section 50 of the Arbitration Act provides for the orders pending before it, the Madras High Court held as follows: which can be made the subject-matter of the appeal, the forum to hear the appeal is to be tested with reference to the "Therefore, in the light of the statutory obligations, it appropriate law governing the authority or forum which cannot be said that the issues involved in the Arbitration passed the original order, that is, in the case on hand, the Tribunal as well as the issues coming under Sections 397 and CLB. Section 10F read with Section 10(1)(a) of the Companies 398 of the Act are two different issues and therefore, in view Act provides for such forum to hear the appeal from the orders of the difference in nature of powers and the authority under of the CLB as the High Court within the jurisdiction of which the Section 8(3) of the Act, 1996, empowering the arbitrator to Registered Office of the company in issue is situated." make an award even during the pendency of an application under Section 8, there is no scope for any conflict in the "The appeal is a statutory remedy and it can lie only to the decisions of the Arbitral Tribunal in respect of the specified forum. The appellate forum cannot be decided on the proceedings referred to it. Whereas the scope of Sections basis of cause of action as applicable to original proceedings 397 and 398 of the Act in dealing with the above statutory such as suit which could be filed in any court where part of obligations is distinct and the CLB has every jurisdiction to cause of action arises." deal with it which is not coming under the purview of Clause 21 of the agreement which only indicates the dispute Special Nature of Jurisdiction of CLB arising out of the agreement and relating to claims and The rights of shareholders to seek remedy against acts of counter claims." oppression and mismanagement are statutory rights while rights of parties to an Arbitration Agreement are contractual in nature. Conclusion Protection of minority rights enshrined under the Act are In Sudarshan Chopra's case cited supra, the Punjab and statutory rights and the powers conferred upon CLB are Haryana High Court had held that the jurisdiction of CLB under statutory powers. Shareholders who are parties to an arbitration Sections 397 and 398 is not in any way affected by the agreement can neither take away those statutory rights nor existence of arbitration clause and, therefore, the CLB which enter into any agreement ousting the jurisdiction of CLB nor can exercises power under those Sections and passes orders as any other judicial forum or court exercise those powers specially per the provisions of Section 402 of the Companies Act can conferred upon CLB. Mere existence of an Arbitration proceed with the matter notwithstanding the arbitration clause. Agreement cannot oust the jurisdiction conferred upon and the enormous powers of CLB. Certain reliefs capable of being In Sporting Pastime India Limited and K.K. Shivakumar v. granted by CLB under Sections 402 and 403 of the Act cannot Kasthuri and Sons Limited, [2007] 141 Comp Cas 111 (Mad), be granted by an Arbitral Tribunal. Unless the subject matter of decided on , 28th June 2006, the Madras High Court observed the dispute and the parties are common, the proceedings that "the relief sought for in the Company Petition under the before CLB cannot be stalled by making applications under provisions of Sections 397 and 398 read with Sections 402 and Section 8 or 45 of ACA. Merely if certain parties, who are not 403 of the Act for the various acts which are statutorily not necessary parties, are added to a company petition under performed like failure of the second respondent to maintain the Sections 397 and 398, CLB is not powerless to refer the parties minimum statutory number of seven members in the Company, to Arbitration if proper and timely applications are made under pledge of the properties and assets of the Company in violation appropriate provisions of the ACA. of the Foreign Exchange and Management Act, siphoning of the Company's funds, increase of authorised Share Capital from September ( A -383) 1133 CHARTERED SECRETARY 2012 ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 64

Articles

Pronamika Bhattacharya, ACS Head - Legal & Company Secretary Casio India Co.Private Limited New Delhi

[email protected] Arbitrability of Disputes Relating to Oppression and Mismanagement

The mere fact that an agreement contains an arbitration clause would not ban the court/tribunal from adjudicating the disputes. Issues arising from proceedings arising under sections 397/398 cannot be left to be adjudicated by an arbitrator.

ections 397 - 409 of the Companies Act, shareholders owe an additional duty of loyalty to the minority 1956 deal with "Oppression and shareholders of a corporation. This duty generally applies when a Mismanagement". These provisions are controlling shareholder engages in transactions with the company. very essential and can be effective for the The controlling shareholder must show that its transactions with the protection of the interests of those who company are objectively fair. The standard applies only when the S are vulnerable and may be suppressed by controlling shareholder stands on both sides of a transaction and those in power in a corporate only if the controlling shareholder receives something from the environment. The quasi-judicial bodies, company to the exclusion of, and detriment to, the minority Judicial bodies and the Central stockholders of the company. Government of India are entrusted with the responsibility of settling disputes Section 399(1) of the Companies Act stipulates that in the case relating to oppression and of a company having a share capital, not less than one mismanagement in a Company under the hundred members of the Company or not less than one - tenth Companies Act, 1956. The law on this of the total members, whichever is less, OR any member(s) point is very clear, candidly described and holding not less than one - tenth of the issued share capital of aims at achieving "justice". the Company, provided that the applicant(s) have paid all Every shareholder of a company has an official, signed sums due on their shares and in case of a company not having and legally valid agreement only with the company share capital not less than one - fifth of the total number of its executed at the time of buying the shares thereof and members, shall have the right to apply for redress of their consequently, a new shareholder owes to the existing complaints under sections 397 and 398 to the Company Law and future shareholders a fiduciary responsibility not to Board [to be substituted by the National Company Law act in detriment of the brother shareholders! Controlling Tribunal with the coming into force of the Companies (Second September Amendment Act), 2002]. Therefore a group of shareholders, 2012 CHARTERED SECRETARY 1134 (A -384) ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 65

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"mandatory" clause in any major Agreement/Understanding between parties. Use of Arbitration as an alternative dispute resolution mechanism offers a valid alternative to litigation, but the option to refer disputes for arbitration is sometimes omitted by prior arrangements between the parties. Generally all disputes involving private rights that can be decided by a civil court may be referred to arbitration. Sometimes referring disputes to arbitration may be required under a statute for e.g. Section 7 B of The Telegraph Act 1885. On the other hand there are certain matters which cannot be referred to arbitration as per the Indian laws - to name a few could be, personal law matters, criminal proceedings, disputes under TRAI Act, 1997, IRDA Act, 1999. being the minority can seek protection of their shareholders’ rights in the event of suppression by the remaining Complicated commercial and business transactions lead to shareholders who may form a larger proportion of the total multiple forms of Joint Venture Agreement (JVA), Share shareholding of a company. Under section 402, section 408 Purchase Agreement (SPA) and Share Holders Agreement and section 409 of the Companies Act,1956 the Company Law (SHA), all carrying an arbitration clause to settle disputes that Board (CLB) and the Central Government have extensive arise from these agreements. The JVA, SPA and SHAs are powers to grant a wide range of reliefs against oppression and contracts between the executing parties. An arbitration clause mismanagement when a complaint is brought before the CLB appearing in these contracts is an arbitration agreement under any or both the sections 397 and 398, full particulars are between such parties to the contract. It is pertinent to note here required to be given by the petitioning shareholder about the that these contracts generally do not bind the company, a alleged acts of mismanagement & oppression. None of the separate entity, unless it is also a party to such contract. allegation which are proposed to be raised by a petitioner can However, in some of the cases the terms and conditions of be vague or uncertain. these agreements are incorporated in the articles of association of the company also. Further, a study and The primary question for consideration is can a dispute where, interpretation of section 36 of the Companies Act, 1956 (the Party A alleges acts or instances of oppression over it by Party Act) leads to the conclusion that articles of association B often on the ground that the latter holds a larger portion of (hereinafter referred to as the Articles) of a company, when share capital of the company and holds itself entitled to take registered, bind the company and the members thereof to the decisions adding to its value at the detriment of the former, same extent as if it had been signed by the company and by wherein both hold shareholders interest in XYZ Ltd., be settled each member. Thus, it will not be wrong to say that the Articles by resorting to Arbitration proceedings under the Arbitration & are a contract entered into between each member and the Conciliation Act, 1996. In place of acts or instances of company respectively. The Articles are a contract and an oppression it may even be acts or instances of arbitration clause incorporated in it partakes the nature of an Mismanagement wherein the company funds are arbitration agreement between the members and the laundered/siphoned off by a larger and stronger group of company. Therefore where any JVA, SHA and SPA in which shareholders to the detriment of a disagreeing minority group the Company is not a party and consequently will not bind the of shareholders. Other relevant questions may be can the CLB company if the terms of such Agreements are not made part of prohibit the parties to a contract containing an arbitration the Articles of the Company, either each and every clause of clause from pursuing arbitration proceedings according to the the contract could be incorporated in the Articles or by way of clause in their contract or can the CLB carry out parallel judicial a reference to such contracts in the Articles. proceedings? Or what consequences follow in the event of The nature of disputes arising out of aforesaid agreements or contradictory orders by the arbitrator and the CLB? Or where like instruments mainly confines to the management functions an applicant is not able to satisfy the condition under section and control of the company where invariably the aggrieved 399(1), i.e he holds less than 10% of the total voting power and person/group alleges non-compliance with the terms of the is being oppressed by the majority what will be his recourse? agreements and/or the Articles and are usually of the following Following discussion seeks to find answers to these questions. kinds: l Manner of utilization of funds, i.e. selection of projects to invest Looking at the current scenario of the rate of pendency of any in or of association's e.g suppliers etc. to be entered into form of dispute before adjudicating authorities the alternate l Deadlock in meetings due to non-appointment of dispute resolution mechanism has become not just popular or nominated director(s) widely accepted but has attained importance of being a September (A -385)1135 CHARTERED SECRETARY 2012 ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 66

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where no rights of third party are affected apply for arbitration of the disputes 'not later than when submitting his first statement on the substance of the dispute'. (right in personam - arising to only parties Once all conditions stipulated under section 8 are satisfied the to an agreement) then any dispute arising judicial authority is bound to refer the parties to arbitration. between the parties to an agreement Under Section 16 of the Arbitration Act the arbitral tribunal is competent to rule on its jurisdiction. The arbitrator has the may be referred to arbitration. Thus in a authority to reject any reference made to it if it believes that contract between majority shareholders such matters are not referable to arbitration. with the Company to the detriment of the Since section 8 is a mandatory provision the core issue minority cannot be referred to arbitration (summation of earlier raised questions) is whether all disputes arising out of JVA, SPA, SHA, Articles should be adjudicated because under section 402 only the by the process of arbitration alone if there is an arbitration Company Law Board has the authority to clause in the said agreements or could they be decided by the Court itself ?The Judicial authority prima facie has to come to decide the case and the rights of the the conclusion that the requirements of section 8 have been minority shareholders are rights in rem to fulfilled, before referring the parties to arbitration. By virtue of the contract between the Company & the mandate of the provision of section 8 of the Arbitration Act once the ingredients of this section are satisfied, then even in majority shareholders. respect of matters covered under section 397/398 of the Companies Act, 1956 shall have to be referred to arbitration in l Non-supplying of information required by the other group terms of Section 8 as the case may be of the Arbitration Act. l Effecting changes in the shareholding pattern in detriment The Apex Court in the matter of P. Anand Gajapati Raju v. to the other person or group P.V.G. Rau (2000) 4 SCC 539 held that the language of Thus the possible answer to the last question raised in the section 8 of the Arbitration Act 1996 is pre-emptory. It is earlier paragraph can be - If the articles contain arbitration obligatory for the court to refer the parties to arbitration, if the clause or if the contract contains arbitration clause, then an arbitration agreement covers all the disputes between the oppressed shareholder who does not have the required parties in the proceedings before the Court. In Pinaki Das eligibility in terms of shareholding can resort to the remedy of Gupta v. Maadhyam Advertising (P) Ltd. 2003 114 CC 346 the arbitration. Because in such cases the Company Law Board CLB (Delhi) had observed that the main grievance of the (CLB) has no jurisdiction to adjudicate because of the petitioner in the petition was non - performance of the terms of ineligibility of the applicant shareholder to approach it. the agreement and it was found that the arbitration clause in However, nowadays the arbitration clause in any contract is the agreement specifically provided for arbitration in cases of usually pressed in aid as a defence strategy against an action non-performance of the terms of the Agreement. Therefore, it of oppression and mismanagement brought against the was held that the matter covered in the petition was the subject company and indulging shareholders before the Company Law matter of the arbitration agreement. There was no scope to Board. examine whether the petitioner has been oppressed or not. Before taking note of the decisions in which the CLB has Matter was referred to the arbitrator. formulated legal principles to determine what are and what are not arbitrable disputes, let us take a look at the relevant On the other hand there are judgements stating that matters provisions of the Arbitration and Conciliation Act, 1996: under section 397/398 of the Companies Act, 1956 cannot be Section 7: To submit any dispute between parties to a contract adjudicated by an arbitrator. An arbitrator can have no powers for arbitration, an arbitration agreement should exist between such as those conferred on the court by section 402 of the the parties. 'Arbitration Agreement' means the agreement by Companies Act and other statutes. In Haryana Telecom Ltd v. the parties to submit the disputes (present or future) to Sterlite Industries (India) Ltd, (1999) 5 SCC 688, the rationale arbitration and that it shall be in writing and signed by the adopted by the Supreme Court was that the dispute should be 'parties'. the subject of arbitration agreement, so that it could be referred Section 8(1) requires any judicial authority to refer the matter to arbitration. In this case the Supreme Court refused to refer before it for arbitration where an arbitration clause is provided the winding up petition, based on inability to pay debt, to in a contract for resolving the disputes arising from or under arbitration on the ground that winding up of a company is not such contract between the parties. Further, it stipulates that the the subject of arbitration agreement. Thus, what can be party who claims the existence of arbitration agreement may referred to the arbitrator is only that dispute or matter which the arbitrator is competent to decide. In the Haryana Telecom case September it was held that the arbitrator notwithstanding any agreement 2012 CHARTERED SECRETARY 1136 ( A -386 ) ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 67

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between the parties, would have no jurisdiction to order legislature is not yet ready to do away the winding up of a company since such power is conferred on a governmental/court's interference to control key sectors of High Court by the Companies Act. In an earlier decision in O. growth in India. Even though this may not be in the interest of P. Gupta v. SGF (Pvt.) Ltd. (1977) 47 Comp Cas 297 (Del) an the Indian economy with the increasing infusion of foreign application was filed for stay of petition under section 397 and Investment because investors seek the freedom of choice of 398 of the Companies Act, 1956 before the Delhi High Court. the forum & mechanism for dispute resolution. It was held that power to stay the petition was discretionary and it was for the Court to decide whether matter should be To conclude the Companies Act, 1956 has empowered the referred to arbitrator for adjudication or not. Even if the Articles Company Law Board to decide the issues relating to of Association of a company contains provisions for arbitration, oppression and suppression of minority by majority and also the matters dealt with by 397 and 398 cannot be referred to vice versa, and also mismanagement of the finances and arbitration or such proceeding be stayed as a matter of affairs of the company. In other words, the Company Law practice. In another judgement the Delhi High Court has clearly Board is the statutory forum established to adjudicate and stated that the right of shareholders under section 397 or 398 determine all issues arising out of the Act and pertaining to its is a statutory right, which by section 8 of the Arbitration Act, jurisdiction. But often, in a petition under sections 397 and 398, 1940 cannot be ousted by a provision in the articles of the respondents make a claim that the disputes alleged in the association of the Company. This application was instituted by petition are subject matter of arbitration contained in the the respondents for stay of the proceedings on account of the agreements and/or the Articles of the company and therefore fact that there was an arbitration clause in the Articles of they should be referred to arbitration as CLB has no jurisdiction Association of the Company. The Delhi High Court held that to adjudicate. The CLB looks into the disputes raised and the Articles cannot debar the court's jurisdiction in the matter allegations made in the petition to ascertain whether the of a petition under section 397/398 of the Companies Act 1956 allegations relate to the violation of the contractual terms of the (Surendra Kumar Dhawan v. R. Vir & others (1977) 47 CC contract or any violation of the provisions of the Act and /or the 276). In a recent judgement on 15th April 2011 in Booze Allen Articles of the Company.If the allegations pertain to the and Hamilton Inc. v. SBI Home Finance and others the violation of the Statute or the Articles or in relation to the rights Supreme Court observed that - adjudication of certain of the oppressed person in his capacity as a member of the categories of proceedings are reserved by the Legislature company, then it refuses to refer the parties to arbitration. exclusively for public as a matter of public policy. This decision The rationale adopted by the CLB is legally sound because the sets out the position that a mortgage suit cannot be referred to Companies Act, 1956 is a special Act compared with the arbitration because it involves a right in rem - a situation where Arbitration and Conciliation Act, 1996 which is general one as third party rights may be affected. Therefore we can rightly far as arbitration is concerned and the former is special as far conclude that where no rights of third party are affected (right as violations of its provisions are concerned. Since the CLB is in personam - arising to only parties to an agreement) then any a special Tribunal specifically established to deal with and dispute arising between the parties to an agreement may be adjudicate on issues resulting in violations of the Act the referred to arbitration. Thus in a contract between majority provisions of arbitration would have no application to shareholders with the Company to the detriment of the minority determine such issues. Further, when the acts of the cannot be referred to arbitration because under section 402 oppressor infringe the rights of the oppressed such only the Company Law Board has the authority to decide the infringement or violations cannot be adjudicated through the case and the rights of the minority shareholders are rights in process of arbitration because violation of statutory rights is rem to the contract between the Company & majority not the subject of arbitration agreement. Merely the existence shareholders. of an Arbitration clause in a contract is not a valid ground to bar the Courts from exercising its jurisdiction. When an arbitration It is undoubtedly true that the Arbitration Act can help in clause in any agreement uses the phrase "disputes arising speedy justice and decrease the load of litigation on Indian under or in connection with this agreement" it may cover a Judiciary considerably. But the biggest drawback of the wide range of disputes. However, disputes such as oppression Arbitration Act is that it is silent about the necessary and mismanagement which may or may not lead to winding up qualifications that a person must possess to be appointed as are serious corporate issues and may considerably affect the an arbitrator.On the contrary Section 402 of the Companies prospects of the Company, its directors/employees and Act 1956 gives specific power to the specialised CLB to possibly the economy of the nation. The standard of proof in dispose disputes arising under section 397/398. Such such matters is as high as required for ordering winding up of loopholes can lead to gross injustice to the parties in serious a company. Thus, matters which fall within the purview of matters like oppression and mismanagement in a company. section 397/398 cannot be left to arbitration. The existing statutory control that we see over disputes in key sectors like power & telecom is a clear indicator that the Indian September (A-387)1137 CHARTERED SECRETARY 2012 ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 68

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Naresh Kumar*, FCS Advocate & Arbitrator - Business Laws, New Delhi.

[email protected]

Arbitrability of Disputes Relating to Oppression and Mismanagement

Parties can include an arbitration clause in the contract to settle all differences and disputes arising between them out of or relating to their contract by arbitration in accordance with the law and procedure of their choice. However, the CLB alone is vested with statutory powers to deal with the cases of oppression and mismanagement. The parties cannot enforce their contractual rights through a petition before the CLB styling their disputes as acts of oppression and mismanagement.

Arbitration and of England, Fourth Edition, Vol. II). Conciliation Act, 1996 Ronal Bernstein's definition: "Where two or more persons agree that a dispute or a potential Arbitration-Important dispute between them shall be decided in a legally binding way by one or more impartial persons in a judicial manner, that is, upon Definitions evidence put before him or them, the agreement is called an Section 2(1) of the Arbitration and Conciliation Act, arbitration agreement or a submission to arbitration." 1996, (Act) defines arbitration as "any arbitration whether or not administered by a permanent arbitral It emerges from the above definitions that "Arbitration" is the institution." method for resolving and adjudicating commercial disputes by the decision of one or more impartial person(s) called arbitrators and Reference can be made to the following definitions to not a court of law. clarify the concept of `arbitration' in proper perspective: Act not in derogation of Halsbury's definition: "Arbitration is the reference of dispute between not less other laws than two parties, for determination, after hearing both Section 2(3) of the Act provides that the provisions of Part I of sides in a judicial manner, by a person or person other the Act (which apply to arbitration which takes place in India) than a court of competent jurisdiction" (Halsbury Laws shall not affect any other law for the time being in force by virtue of which certain disputes may not be submitted to arbitration. * Also Visiting Professor IIFT, New Delhi. Simply stated, the provisions of the Act are in addition to and September not in derogation of the provisions of any other law in force. 2012 CHARTERED SECRETARY 1138 ( A -388) ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 69

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In Afcons Infrastructure Limited v. Cherian Varkey Construction Parties to be referred to Company (P) Limited, Kochi, AIR 2007 (NOC) 233 (Ker.) the arbitration where arbitration Supreme Court ruled that power of court to refer parties for arbitration would and must necessarily include, imply and agreement exists inhere in it the power and jurisdiction to appoint arbitrator also. Section 8(1) of the Act provides that a judicial authority, before which an action is brought in a matter, which is the subject of Power of judicial authority to an arbitration agreement shall, if a party so applied not later than when submitting his first statement on the substance of the refer parties to arbitration dispute, refer the parties to arbitration. Section 45 of the Act provides that notwithstanding anything contained in Part I or in the Code of Civil Procedure, 1908, a The Supreme Court in P. Anand Gajapathi Raju v. P.V.G Raju, judicial authority, when seized of an action in a matter in 2000 (4) SCC 539 observed that the language of section 8 is respect of which the parties have made an agreement referred preemptory in nature. Therefore, in cases where there is an to in section 44, shall, at the request of one of the parties or any arbitration clause in the agreement, it is obligatory for the court person claiming through or under him, refer the parties to to refer the parties to arbitration in terms of their arbitration arbitration, unless it finds that the said agreement is null and agreement and nothing remains to be decided in the original void, inoperative or incapable of being performed. action after such an application is made except to refer the dispute to an arbitrator. Simply stated, section 45 makes it mandatory for a judicial authority to refer the parties to arbitration if the following The Supreme Court in the matter of Sukanya Holdings (P) conditions are satisfied: Limited v. Jayesh H. Pandya AIR 2003 SC 2252 held as under: (i) The matter pertains to the agreement made by the parties 'The language used in section 8 is - in a matter which is the to be referred for arbitration under section 45, subject-matter of an arbitration agreement' Court is required to (ii) One of the parties or any person claiming through or under refer the parties to arbitration. Therefore, the suit should be in him has made a request for referral to arbitration, and respect of a "matter" which the parties have agreed and which (iii) The arbitration agreement is or has not been rendered null comes within the ambit of arbitration agreement. Where, and void, inoperative or incapable of being performed. however, a suit commences- "as to matter" which lies outside the arbitration agreement and is also between some of the In Shin Etsu Chemical Company Limited v. Aksh Optifibre parties who are not parties to an arbitration agreement, there is Limited (2005) 7 SCC 234, the Supreme Court held that "the no question of application of section 8. The words 'a matter' words `shall' and `unless' appearing in section 45 mandate that indicate entire subject-matter of the suit should be subjection to arbitration. September ( A -389 ) 1139 CHARTERED SECRETARY 2012 ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 70

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A judicial authority does not have discretion for refusing to refer the parties to arbitration. Section 45 of the Act uses the mandatory expression `shall' and makes it obligatory upon the judicial authority to refer the parties to arbitration, if conditions specified therein are fulfilled.

before referring the parties to arbitration, the judicial authority AC 324 at P.342 while allowing the prayer ruled that in case of should be satisfied that the arbitration agreement is not null and oppression and mismanagement the complaining shareholder void, inoperative or incapable of being performed." Clearly must be under a burden which is unjust or harsh or tyrannical. section 45 casts an obligation upon the judicial authority when The judgment was also followed in H.R. Harmer Limited [(1958) seized of the matter to record a finding as to the validity of the 3 All ER (689], stating that "a persistent course of unjust arbitration agreement as stipulated in the section and there is conduct must be shown". nothing to suggest either from the language of the section or otherwise the findings to be recorded is to be only ex-facie or An attempt to force new and more risky objects upon an prima facie. Existence of the above three conditions as sine unwilling minority may be in circumstances amount to qua non for referring the parties to arbitration. oppression. [Hindustan Co-operative Insurance Society Limited AIR 1961 Cal. 443.] In this case the Life Insurance Corporation COMPANIES ACT, 1956 of India acquired the life insurance business of the company and paid compensation. The directors, who had the majority Oppression and Mismanagement voting power, instead of distributing the amount among The words "oppression" and "mismanagement" are not defined shareholders, changed the main objects of the company to under the Companies Act, 1956. In fact, it is impossible to deploy the compensation money for the new objects. The High define these words with precision. As such, meaning and Court ruled that it was an act of "oppression'' because the interpretation of these words depend on the particular facts and majority exercised its authority, in a manner burdensome, circumstances of each case. The following judgments make it harsh and wrongfully. The majority forced the minority clear that the words are used in a generic sense rather than in shareholders to invest their money in different kinds of business literal sense. against their will rather than the life insurance business with safeguards and statutory protections. The clarification given by Lord Cooper in case of Elder v. Elder & Watson, (1952) Scottish Cases 49,(which was cited by The term `oppression' means exercise of majority power in a Wanchoo CJ) and followed in the Supreme Court of India in burdensome, harsh and wrongful manner [Murty v. Industrial Shanti Prasad v. Kalinga Tubes, (1965) 1 Comp. L.J at P.204 Development Corporation of Orissa Limited (1977) Comp Cas is thus: 389(Ori).] It is used in company law to denote that shareholders are subject to some sort of oppression and also "The essence of the matter seems to be that the conduct that the affairs of the company are being conducted in an complained of should be the lowest, involve a visible oppressive manner. departure from the standards of fair dealing, on which every shareholder who entrust his money to the It may be noted that Section 399 prescribes the mandatory company is entitled to rely". qualifications for application under section 397 and 398. Where the company has share capital, - the application must be signed In Scottish Co-operative Wholesale Society, Ltd. v. Meyer, the by at least 100 members or by one-tenth of the total number of society created a subsidiary company to enable it to enter into the members, whichever is less, or by any member or members rayon industry. Subsequently when the need for the subsidiary holding not less than one-tenth of the total number of members. ceased to exist, the society adopted a policy of running down If the company has no share capital, the application has to be its business which depressed the value of its share. The two signed by at least one-fifth of the total number of its members. petitioners, who were managing directors and minority shareholders of the company, successfully pleaded In order to succeed in case of `mismanagement', it must be `oppression'. The Court ordered the Society to purchase the established that the affairs of the company are being conducted minority shares at the value at which they stood before the in a manner prejudicial to the interest of the company or public oppressive policy started. Lord Simonds in the judgment (1959) interest [Section 398(1)(A)]or that, by reason of any change in the management or control of the company, it is likely that the September affairs of the company will be conducted in that manner 2012 CHARTERED SECRETARY 1140 ( A -390 ) ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 71

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of section 10E provides that every bench of the CLB shall be deemed to be a civil court for the purpose of section 195 and every proceeding to be a judicial proceeding.

Section 402 of the Companies Act, 1956 enumerates the powers vested with the CLB under sections 397 and 398 for regulation of the conduct of the company's affairs in future. Arbitrability of disputes relating to Oppression and Mismanagement The issue of arbitrability of disputes relating to oppression and mismanagement depends on the following differences between the two enactments:

a. It is an important rule of interpretation that a special law prevails over the general law. In case of oppression and mismanagement, the Companies Act, 1956 is a special enactment, which deals with corporate management and [Section 398(1)(b)]. shareholders rights, whereas Arbitration and Conciliation Act, 1996 is the general enactment dealing with resolution If the court is so convinced, it may, with a view to bring to an of commercial disputes. end or prevent the matter complained of or apprehended, make such order as it thinks it [(section 398(2)].In the case of b. The Arbitration and Conciliation Act, is a latter enactment. Rajahmundry Electric Supply Corporation v. A. NageswaraRao, It is a well settled principle that a latter enactment prevails AIR 1956 SC 213, mismanagement was alleged the over an earlier enactment because the latter law was petitioners. The Supreme Court found that the Vice Chairman enacted, after considering the existing provisions in the of the company grossly mismanaged the affairs of the company earlier enactment. and had drawn considerable amounts for his personal purpose, that large amounts were owing to the Government for charges c. The object of the Arbitration and Conciliation Act is to of supply of electricity, that machinery was in a state of provide the law and procedure pertaining to arbitration and disrepair, that the directorate had become greatly attenuated conciliation, whereas the object of the Companies Act is to and `a powerful local junta was ruling the roost', and that the lay down the law and procedure for the companies and shareholders outside the group of the chairman were other associations. powerless to set matters right. This was held to be sufficient evidence of mismanagement. The Supreme Court accordingly d. The Arbitration and Conciliation Act deals with contractual appointed two administrators for the management of the rights of parties, whereas the Companies Act deals with the company for a period of six months vesting in them all the statutory rights of shareholders and companies. powers of the directors. e. The Arbitration and Conciliation Act, does not prescribe The mismanagement should be present and continuing. The qualifications and experience of arbitrators, whereas the allegation of mismanagement in the past, even if proved, are Companies Act, prescribes the qualification, experience not enough to establish an existing injury to the interest of the and powers of the members of CLB to adjudicate the company or public interest [R.S. Mathur v. H.S. Mathur, disputes in a judicial manner. Provisions of Section 10E of (1970)1 Comp LJ 35]. the Companies Act, provides powers and functions to the CLB and states that every bench of the CLB to be Powers of the CLB considered a civil court and its proceeding a judicial Section 10E of the Companies Act, provides for general powers proceeding. and functions to the Company Law Board (CLB) as may be conferred under the Companies Act or any other law and f. Under the Arbitration and Conciliation Act, 1996, relief is conferred by the Central Government. Sub-section (4C) of provided to the claimant, whereas under sections 397 and section 10E specifically provides that every bench of the CLB 398 of the Companies Act, relief is provided to the shall have powers vested in a court under the Code of Civil company. Procedure, 1908, while trying a suit. Further, sub-section (4D) September ( A -391 )1141 CHARTERED SECRETARY 2012 ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 72

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In Sangramsingh P Gaekwad v. Stantadevi P Gaekwad [364 Section 45 of the Act provides that (SC)2005] 11 SCC 314 the Supreme Court ruled that violations of contractual rights may be agitated by way of a civil suit and notwithstanding anything contained in only in extra ordinary circumstances, would such matters Part I or in the Code of Civil be looked into by the CLB under section 397 of the Companies Act. Procedure, 1908, a judicial authority,

In Sumitomo Corp. v. CDC Financial Services (Mauritius) Ltd. when seized of an action in a matter [(2008) 83 CLA/ 343 (SC) 2008] 4 SCC 91 the apex court in respect of which the parties have approved the ruling of the CLB that the proceedings under sections 397 and 398 of the Companies Act can be invoked made an agreement referred to in only if the disputes even among the shareholders relate to the section 44, shall, at the request of affairs of the company. one of the parties or any person In Haryana Telecom Limited v. Sterlite Industries (India) claiming through or under him, refer Limited, AIR 1999 SC 2354 the Supreme Court observed that "sub-section (1) of section 8 of the Arbitration and Conciliation the parties to arbitration, unless it Act provides that the judicial authority before whom an action is brought in a matter, will refer the parties to arbitration in the said finds that the said agreement is null matter in accordance with the arbitration agreement. This, and void, inoperative or incapable of however, postulates, in our opinion, that what can be referred to the arbitrator is only the dispute on matter which the being performed. arbitrator is competent or empowered to decide." In E-Logistics Private Limited and Sanjeevi v. Financial The High Court of Delhi in O.P. Gupta v. Shiv General Finance Technologies (India) Limited (2007) 139 Comp Cas 311(CLB), (P) Limited (1977)47 Comp Cas 297 ruled that a member's right the CLB directed the parties to have their disputes resolved to move the Company Law Board was a statutory right and through arbitration as per the Arbitration Agreement. The CLB cannot be affected by an arbitration clause in the articles of ruled that the grievances of the petitioner, though styled as acts association of a company. of oppression and mismanagement in the affairs of the Company, but, in fact, were flowing from their agreement and, In R. Balakrishnan and Ors. v. Vijay Dairy and Firm Products therefore, those disputes cannot be adjudicated in the present Private Limited and Ors. (2005) 25 Comp Cas 66 (CLB), the proceedings. The same logic was followed in Bahety and Ors. CLB dismissed that petition without going into the merits on the v. Ratika Computronix P. Ltd. and Ors (2010) 157 Comp Cas ground that the company petition is intended for the purpose of 225 (CLB). recovering the money due under the settlement agreement, which is not an object contemplated in Section 397. Recently in Telenor Asia (P) Limited and Ors v. Unitech Wireless (Tamil Nadu) (P) Limited and Ors (2012)107 CLA In State of Orissa v. Klockner & Co., AIR, 1966, SC 2140 the 547(CLB), the CLB ruled that where the share subscription Supreme Court ruled that in the absence of any serious agreement and shareholders' agreements are vitiated by fraud challenge to the commercial contract or to the arbitration are complicated question of law and fact, and the same ought agreement, it has to be found that the agreement was valid, not to be tried by the CLB in a summary jurisdiction under operative and capable of being performed and that there are section 397/398, but left to be adjudicated by the arbitral disputes between the parties with regard to the matter agreed tribunal. A reference to arbitral tribunal in case of international to be referred to arbitration. arbitration between the parties is now mandatory in law by virtue of section 45 of Arbitration and Conciliation Act, if the It was further ruled that a judicial authority does not have ingredients of the section are present, that is, the contract discretion for refusing to refer the parties to arbitration. Section provides for it, one of the parties makes the requisite 45 of the Act uses the mandatory expression `shall' and makes application and the judicial form does not find that the it obligatory upon the judicial authority to refer the parties to arbitration agreement is null and void, inoperative or incapable arbitration, if conditions specified therein are fulfilled. Stay of of being performed. suit is mandatory if the conditions specified in section 3 of the Foreign Awards (Recognition and Enforcement) Act, 1961 are The dispute pertained to international arbitration in which the fulfilled. Wireless (Tamil Nadu) (P) Limited, Applicants were Indian September Strategic Partners ("ISP") in the joint venture agreement with 2012 CHARTERED SECRETARY1142 ( A-392) ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 73

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Telenor Asia (P) Limited of Singapore. The CLB distinguished terms of the JVA was violated by misrepresentation on the part the case law cited before it on facts and explained why of ORE Holdings and others and claimed damages for the reference to arbitration was denied in those cases. It also losses suffered by the GC Holdings. The CLB had elaborately rejected other arguments against allowing application for dealt with the acts of alleged mismanagement, but the same reference to arbitration explaining the legal position under were again agitated before the ICC. section 45 of the Arbitration and Conciliation Act, which has made it mandatory to make reference to arbitration in case of The High Court found no merit in the contention of the international reference when contract provides for it.The CLB appellants that plaintiffs were attempting to frustrate the disposed of the application by referring the parties to arbitration arbitration. The High Court, however, observed that since most in accordance with the rules of the Singapore International of the issues were dealt with and resolved by the CLB, the Arbitration Centre as per the agreement. appellants could not raise them before the arbitrator. The Court emphasized that the basic objective in referring the matter to In GC Holdings (P) Limited v. Ramasamy Athappan (2012) 109 arbitration was to provide speedy remedy to the parties, the CLA 238 (Mad), the parties first filed their contentions before same should not be allowed before the ICC so as to make the the CLB, which dealt with and resolved the issues. The CLB whole process expensive. Regarding applicability of section 45 subsequently modified its own earlier order, issuing various of the Arbitration and Conciliation Act, the High Court explained directions. The parties then approached the High Court and the the legal position - the existence, validity and scope of Single judge allowed the injunction application restraining the arbitration agreement could be determined by court before the appellants from referring the disputes to arbitrator under commencement of arbitration proceedings or at the stage of section 45 of the Arbitration and Conciliation Act. enforcement of the award under section 48 of the Act. The appellants, having initiated proceedings before various forums, The Division Bench of the High Court of Madras ruled that cannot now seek arbitration as an additional remedy. Waiver is where on the facts and circumstances of the case and in view already ‘implicit from the acts of the appellants’, which indicates of the pitched battle of litigation between the parties the Single their intention not to proceed with the arbitration. Judge has rightly held that there was a waiver by estoppels and that the arbitration clause in the joint venture agreement had become inoperative, there will be no ground for interference Conclusion with the order of the Single Judge allowing injunction The parties have freedom to contract. They can include an application restraining the appellant from proceeding with the arbitration clause in the contract to settle all differences and arbitration under section 45 of the Arbitration and Conciliation disputes arising between the parties out of or relating to their Act. When the CLB has already resolved the same issues in contract by arbitration in accordance with the law and the company petition, the appellants cannot contend that they procedure of their choice. However, the CLB alone is vested are needed to be raised in the arbitration. with statutory powers to deal with the cases of oppression and mismanagement. The parties cannot enforce their contractual In this case the issues related to the disputes pertaining to the rights through a petition before the CLB styling their disputes as joint venture agreement (JVA) in relation to the affairs of acts of oppression and mismanagement. Cheran Enterprises (P) Limited. The CG Holdings contended before the International Chamber of Commerce (ICC) that the September ( A -393) 1143 CHARTERED SECRETARY 2012 ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 74

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Rajendra Sawant, FCS Welspun Infratech Limited, Mumbai.

[email protected] Arbitrability of Disputes Relating to Oppression and Mismanagement

Oppression and Mismanagement involve disputes of very serious nature and hence the Companies Act has left such issues to be decided by the Company Law Board being a quasi judicial body. However opinion is divided as to whether such issues could be referred to arbitration for resolution.

INTRODUCTION Section 10 of the Companies Act, 1956 provides that powers and functions conferred on the Court under Companies Act, 1956 t is not uncommon to find an arbitration shall be exercisable by the High Court within whose jurisdiction clause in a shareholders agreement. An registered office of the company concerned is situated except to arbitration clause in a shareholders the extent to which jurisdiction has been conferred on any District agreement generally provides 'any or all Court or District Court subordinate to that High Court pursuant to disputes or differences arising out of or in Section 10(2) of the Companies Act, 1956. I connection with this agreement or its performance, shall be submitted to final and binding arbitration………'. Thus by virtue of arbitration clause which itself is an arbitration agreement, pursuant to Section 7 of Arbitration and Conciliation, Act, 1996, the shareholders and the company, agree to refer to the arbitrator any or all the disputes or differences arising inter se shareholders or between the company and shareholders. Normally all the terms of shareholders agreement including arbitration clause are incorporated in the articles of association of the company.

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Sections 397 and 398 confer a the parties to arbitration, unless it finds that the said agreement is special statutory right to the null and void, inoperative or incapable of being performed. Section 54 in Chapter II (Geneva Convention Awards) of shareholders and CLB is the Arbitration and Conciliation Act, 1996 provides that notwithstanding anything contained in Part I or in the Code of Civil only forum designated by the Procedure, 1908 (5 of 1908), a judicial authority, on being seized Companies Act, 1956, which of a dispute regarding a contract made between persons to whom Section 53 applies and including an arbitration agreement, can be approached by the whether referring to present or future differences, which is valid under that section and capable of being carried into effect, shall shareholders for enforcing their refer the parties on the application of either of them or any person claiming through or under him to the decision of the arbitrators right under Sections 397 and and such reference shall not prejudice the competence of the 398, provided conditions of judicial authority in case the agreement or the arbitration cannot Section 399 are fulfilled. proceed or becomes inoperative. The Arbitration and Conciliation Act, 1996, gives powers to judicial Section 10-E of the Companies Act, 1956 as amended by authority to refer the dispute to the arbitration in respect of which Companies (Amendment) Act, 1988, provides for Constitution of the parties have entered into an arbitration agreement. The Board of Company Law Administration. The Central Government parties to arbitration agreement cannot file a suit in a court of law in terms of Section 10(E) of the Companies Act, 1956 has in respect of any matter covered by the agreement; otherwise the constituted an independent Company Law Board (CLB) vide very purpose of arbitration will be frustrated. The court will Notification No. 364 dated the 31st May, 1991. CLB is a quasi- normally not intervene except when provided by the Act. judicial body, exercising equitable jurisdiction. Certain powers However, the other party to the arbitration agreement has to make including powers under Section 397-407 and functions under the application to judicial authority for referring dispute to the Companies Act, 1956, which were earlier being exercised by the arbitration, before submitting its first reply on the statement of High Court or the Central Government, are transferred to CLB dispute. If the plea of arbitration has not been raised before the vide the Companies (Amendment) Act, 1988. The issue being judicial authority, the parties have deemed to waive their right of discussed in this Article is whether powers conferred on CLB arbitration. under Chapter VI of the Companies Act, 1956 to deal with dispute relating to oppression and mismanagement under Sections 397 The Supreme Court in the matter of P. Anand Gajapati Raju v. and 398 can be ousted by an arbitration agreement. P.V.G. Raju (Died) & Ors [(2000) 4 SCC 539] held that the conditions which are required to be satisfied under Sub-sections Power of Judicial Authority to (1) and (2) of Section 8 of Arbitration and Conciliation Act, 1996 before the Court can exercise its powers are : (1) there is an refer matter to Arbitration arbitration agreement; (2) a party to the agreement brings an Section 8(1) of Arbitration and Conciliation Act, 1996 provides action in the Court against the other party; (3) subject matter of the that a judicial authority before which an action is brought in a action is the same as the subject matter of the arbitration matter which is the subject of an arbitration agreement shall, if a agreement; (4) the other party moves the Court for referring the party so applies not later than when submitting his first statement parties to arbitration before it submits his first statement on the on the substance of the dispute, refer the parties to arbitration. substance of the dispute. The language of Section 8 of the Arbitration and Conciliation Act, 1996 is pre-emptory. It is Similar powers are given to judicial authority in Chapter I (New obligatory for the Court to refer the parties to arbitration, if the York Convention Award) and Chapter II (Geneva Convention arbitration agreement covers all the disputes between the parties Awards) of Part II of Arbitration and Conciliation Act, 1996. in proceedings before the Court.

Section 45 in Chapter I (New York Convention Award ) of In Hindustan Petroleum Corporation Ltd. v. Pinkcity Midway Arbitration and Conciliation Act, 1996 provides that Petroleums [AIR 2003 SC 2881], the Supreme Court has held that notwithstanding anything contained in Part I or in the Code of Civil Section 8 of Arbitration and Conciliation Act, 1996 in clear terms Procedure, 1908 (5 of 1908), a judicial authority, when seized of mandates that a judicial authority before which an action is an action in matter in respect of which the parties have made an brought in a matter which is the subject of an arbitration agreement referred to in Section 44, shall, at the request of one of the parties or any person claiming through or under him, refer September ( A -395)1145 CHARTERED SECRETARY 2012 ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 76

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Oppression and mismanagement, being disputes of very serious nature, the Companies Act, 1956 has given powers to CLB to deal with such disputes. Section 399 of the Companies Act, 1956 provides for requisite number of members or members holding requisite voting power to complain to CLB under Sections 397 and 398 of the Companies Act, 1956 and pray for relief under Section 402 of the Companies Act, 1956.

agreement to refer such parties to arbitration, the language of this of the company or 1/10th of the total number of its members, Section is unambiguous. The Civil Court had no jurisdiction to whichever is less, or members holding not less than 1/10th of the entertain a suit after an application under Section 8 of the Act is issued share capital of the company) may apply to CLB, alleging made for arbitration. The Arbitral Tribunal is empowered to rule on that affairs of the company are being conducted in a manner its own jurisdiction including rule on any objection with respect to prejudicial to public interest or oppressive to any member or the existence or validity of the arbitration agreement. members. If on any such application, CLB is of opinion that the affairs of the company are being conducted against public interest In Smt. Kalpana Kothari v. Smt. Sudha Yadav and Ors. [ AIR or in a manner oppressive to any member(s), and the fact would 2002 SC 404], the Supreme Court observed that Section 8 of the otherwise justify winding up on the ground of being 'just and Arbitration and Conciliation Act, 1996 mandates that the judicial equitable', but that the winding up order would be prejudicial to the authority before which an action has been brought in respect of a interest of any member or members, CLB make such order as it matter, which is the subject matter of an arbitration agreement, thinks fit to bring an end to matters complained of. shall refer the parties to arbitration if a party to such an agreement applies not later than when submitting his first statement. Section 398, any member(s) (not less than 100 members of the company or 1/10th of the total number of its members, whichever Can an arbitrator order is less, or members holding not less than 1/10th of the issued share capital of the company) may complain to CLB alleging that winding up of a company? affairs of the company are being conducted in a manner The Supreme Court in Haryana Telecom Ltd. v. Sterlite Industries prejudicial to public interest or prejudicial to the interest of the (India) Ltd.[ AIR 1999 SC 2354] observed that Sub-section (1) of company, or that there has been material change effected in the Section 8 of the Companies Act, 1956 provides that where the management or control or ownership of the company, which is judicial authority before whom an action is brought in a matter, will likely to conduct the affairs of the company in a manner prejudicial refer the parties to arbitration the said matter in accordance with to public interest or in a manner prejudicial to the interest of the the arbitration agreement. This, however, postulates, in our company. If on any such application CLB is of opinion that the opinion, that what can be referred to the arbitrator is only that affairs of the company are being conducted as aforesaid or dispute or matter which the arbitrator is competent or empowered material change in management or control or ownership is likely to decide. An arbitrator, notwithstanding any agreement between to conduct the affairs of the company as aforesaid, CLB may the parties, would have no jurisdiction to order winding up of a make such order as it thinks fit, with a view to bring an end or company since such power is conferred on a high court by the preventing the matters complained of or apprehended. Companies Act and referral of a winding up petition under Section 8 of the Arbitration and Conciliation Act, 1996 was dismissed. Powers of CLB under the Companies Act, 1956 for prevention of Oppression and Mismanagement Chapter VI of the Companies Act, 1956 deals with powers of CLB for prevention of oppression and mismanagement.

Under Section 397, any member(s) (not less than 100 members

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Thus Sections 397 and 398 confer a special statutory right to the shareholders and CLB is the only forum designated by the Companies Act, 1956, which can be approached by the shareholders for enforcing their right under Sections 397 and 398, provided conditions of Section 399 are fulfilled.

In Pinaki Das Gupta v. Maadhyam Advertising (P.) Ltd. [MANU/CL/0040/2002], the CLB held that no doubt Company Law Board has vast powers under Section 402 of the Companies Act, 1956 yet, granting of relief depends on facts of a particular case and if for granting the relief, determination of bona fide disputes is required and the same is covered by an arbitration agreement, then, it is for the arbitrator to decide these issues and not the Company Law Board. Granting of relief in a proceeding under Section 397/ 398 is discretionary depending on the facts of a case. If CLB comes to a conclusion that appropriate relief justified in a particular case can be granted by an arbitrator, then, petition under Sections 397 and 398 of the Companies Act, 1956. there is no reason why the matter cannot be referred to arbitration. However, it has been held in some judicial pronouncements that disputes relating to Sections 397 and 398 cannot be adjudicated Conclusion by an arbitrator. An arbitrator can have no powers such as are Arbitration and Conciliation Act, 1996 provides quick redressal of conferred on CLB by Section 402 of the Companies Act. disputes by private arbitration. The object of arbitration is settlement of dispute in an expeditious, convenient, inexpensive The Delhi High Court in an application filed before it for stay of and private manner so that they do not become the subject of petition under Sections 397 and 398 of the Companies Act, 1956 future litigation between the parties. Arbitration and Conciliation held that power to stay the petition was discretionary and it was Act, 1996, also gives powers to judicial authority to refer to for the Court to decide whether matter should be referred to disputes to the arbitrator, when it is seized of disputes, in respect arbitrator for adjudication or not. If it is found that the arbitrator of which parties have entered into arbitration agreement. cannot deal with the matter because of an impediment in the law, When an arbitration clause in a shareholders' agreement or then obviously the Court is empowered to refuse to stay those articles of association of the company uses the phrase 'any proceedings. Section 9(b) of the Companies Act, 1956, which dispute or difference', it includes a wide range of disputes arising states that any provision in any memorandum, article, or out of relationship inter se shareholders or conduct of affairs of the agreement to the extent that it is repugnant to the Act will be void. company. There may be a situation where majority shareholders The repugnancy between the articles of association and Sections oppresses minority or minority shareholders oppresses majority 397 and 398 of the Companies Act, 1956 can be resolved in one through their affirmative vote. In case of mismanagement, the or two ways, either the article is wholly void by reason of Section affairs of the company are conducted in a manner prejudicial to 9(b) of the Companies Act, 1956 or the article does not apply the interest of public or any member(s) of the company. when proceedings for winding up a company or a petition under Oppression and mismanagement, being disputes of very serious Section 397 or 398 are moved in the Court. [O.P. Gupta v. Sfflv nature, the Companies Act, 1956 has given powers to CLB to deal General Finance (Pvt.) Ltd (1977) 47 Comp Cas 297 (Delhi)]. with such disputes. Section 399 of the Companies Act, 1956 provides for requisite number of members or members holding In Surendra Kumar Dhawan v. R. Vir [1977] 47 Comp Cas 276 requisite voting power to complain to CLB under Sections 397 and (Delhi) the Delhi High Court has clearly stated that the member of 398 of the Companies Act, 1956 and pray for relief under Section a company has a right to file a winding-up petition under Section 402 of the Companies Act, 1956. 433 of the Companies Act, 1956, in certain circumstances. That However, there are conflicting judicial pronouncements regarding statutory right cannot be ousted by articles or any provisions of the arbitrability of disputes relating to oppression and same. Similarly, the shareholders of a company have a right to file mismanagement of the company. In few cases it has been held a petition under Section 397 or Section 398 of the Act if the that dispute relating to oppression and mismanagement is provisions of Section 399 are satisfied. This right is a statutory arbitrable. Whereas in some of the cases it has been held that right, which cannot be ousted by a provision of the article. The powers of CLB to deal with dispute relating to oppression application was instituted by the respondents for stay of the and mismanagement, cannot be ousted by an arbitration proceedings on account of the fact that there was an arbitration agreement. clause in the Articles of the company. The Hon'ble Judge held that the Articles cannot debar the court's jurisdiction in the matter of a September ( A -397) 1147 CHARTERED SECRETARY 2012 ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 78

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it would be entitled to pursue the same. On the basis of this order, the respondent filed another application before the CLB for the Corporate payment of interest which was allowed by CLB vide order dated 31.08.2007. The petitioner applied for the recall of this order but CLB refused to do so vide order dated 18.10.07.These two orders Laws are now the subject matter of appeal before the High Court. Decision : Appeal dismissed. Reason The question which has to be answered is whether the petitioner is liable to pay interest on the aforenoted sum of Rs.75 lacs made by him or whether this payment of Rs.75 lacs made by him as full and final settlement between the parties. The stand of the respondent is forceful and is answered in his favour by the documents on record. Record shows that admittedly on 16.01.2004, the petitioner had been directed to refund the deposits of the respondents along with the interest at the contracted rate till the date of maturity and thereafter at the rate of 5 % per annum till date i.e. the date of actual payment. This order has since attained finality by the withdrawal of the appeal by the petitioner on 29.05.2006. The communication of the petitioner to the respondent dated 10.05.2006 had made an offer of Rs.75 lacs as a onetime settlement; the reply of the respondent dated 17.05.2006 had LW.78.09.2012 however clearly stated that this amount of Rs. 75 lacs was a payment of principal amount; it was accepted as the principal figure CEMENT CORPORATION OF INDIA V. which is further clarified by the order dated 29.05.2006 when the petitioner had withdrawn his appeal, at that point of time also, the POPULATION FOUNDATION OF INDIA [DEL] respondent not being satisfied with the amount of Rs.75 lacs which he had received had got the benefit of the Court permitting him to Co.Appeal (SB) No. 40/2007 get his grievance/legal right addressed. This was accordingly followed up by his filing an application before the Company Law Indermeet Kaur, J. [Decided on 18/07/2012] Board pursuant to which the aforenoted two impugned orders had Companies Act, 1956 - Section 58A - nonrefund of deposit - been passed. CLB directed to refund deposit with interest-company refunded The next submission of the learned counsel for the petitioner is that the principal but not the interest-depositor again approached the respondent is bound by the order of the BIFR which had CLB for refund of interest which was allowed - Company's approved the scheme of rehabilitation of the petitioner company on application for recalling the order rejected - Whether correct - 03.05.2006; attention has been drawn to Para 7.1 of the said Held, Yes. scheme; submission being that the respondent was entitled to receive only the principal sum and no interest quotient was permitted Brief facts which order of the BIFR was approved by the AIFR vide its order Population Foundation of India (hereinafter referred to as the dated 28.03.2000; further submission being that this scheme has respondent)made certain deposits to the tune of Rs.75 lacs to been approved by the High Court and finally by the Supreme Court Cement Corporation of India (hereinafter referred to as the in the year 2009; the petitioner is bound by the terms contained petitioner); the said amounts not having been returned back to the therein; on this count also, he is not entitled to any interest. respondent, an application under Section 58(A) of the Companies This submission of the learned counsel for the petitioner is also Act was filed before the Company Law Board. The Company Law without force. A Bench of this Court in LG Electronics Ltd v. Usha Board after considering the respective contentions of the parties (India) Ltd. & Anr EFA (OS) No.16/2003 dated 16.03.2007 has held passed order dated 16.01.2004 directing the Petitioner to refund the that the deposit amounts by A company with B company where B deposit with interest. Against this order, an appeal was preferred by company is declared as a sick company would not attract the the petitioner before the High Court but withdrawn on 29.05.2006. provisions of Section 22 of the SICA; the said amounts having been However, the High Court vide order dated 29.05.2006 clarified that deposited as a trust money, provisions of Section 22 of the SICA if Population Foundation of India has any grievance or a legal right, would not be applicable. September The Division Bench of this Court had noted that a deposit made by 2012 CHARTERED SECRETARY 1148 ( LW-97 ) ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 79

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a depositor to a company is not a loan; it is money which is given objections raised by the Regional Director, had been rejected by in trust; bar of Section 22 (1) of the SICA is not applicable; as such this Court in this regard. In view of the aforesaid submissions, the amount due to the respondent could not come within the ambit objections raised by the Regional Director no longer Survive. of the scheme promulgated by the BIFR; the BIFR was only dealing In view of the approval accorded by the Shareholders and with the assets of the sick company; the deposits made by the Creditors of the Petitioner/Transferor Company, respondent with the petitioner being a trust money with the representation/reports filed by the Regional Director, Northern respondent were not encompassed within this scheme; the terms of Region and the Official Liquidator, attached with this Court to the the scheme would thus even otherwise not be binding upon the proposed Scheme of Amalgamation, there appears to be no respondent.On all counts, the impugned orders calls for no impediment to the grant of sanction to the Scheme of interference. Amalgamation. Consequently, sanction is hereby granted to the Scheme of Amalgamation under Sections 391 and 394 of the LW.79.09.2012 Companies Act, 1956. The petitioner/Transferor Company will comply with the statutory requirements in accordance with law. DOOSAN POWER SYSTEMS INDIA PRIVATE Certified copy of the order will be filed with the Registrar of Companies within 30 days from the date of receipt of the same. In LIMITED V. DOOSAN CHENNAI WORKS terms of the provisions of Sections 391 and 394 of the Act, and in PRIVATE LIMITED [DEL] terms of the Scheme, the whole of the undertaking, the property, rights and powers of the Petitioner/Transferor Company be C.P.No. 151/2012 transferred to and vest in the Transferee Company without any further act or deed. Similarly, in terms of the Scheme, all the [Decided on 10/07/2012] Indermeet Kaur, J. liabilities and dues of the Petitioner/Transferor Company will be Companies Act, 1956 - Sections 391 to 394 - amalgamation - transferred to the Transferee Company without any further act or scheme provided for change of name and corresponding deed. It is however, clarified that this order will not be construed as amendment/alteration in the memorandum and articles of an order granting exemption from payment of stamp duty or taxes association of transferee company - Regional director objected or any other charges, if payable in accordance with any law; or and insisted separate proceedings prescribed in the Act to be permission/compliance with any other department which may be followed - Whether tenable - Held, No. specifically required under any law. The Transferor Company shall stand dissolved without following the process of winding up. Brief facts Further, since the jurisdiction of the Transferee Company is before This petition has been filed under Section 391 to 394 of the the High Court of Madras and the said Transferee Company has Companies Act, 1956 (for short Act) by the Petitioner/Transferor already moved a petition over there, this order is subject to the Company seeking sanction of the Scheme of Amalgamation (for sanction of the Scheme by the High Court of Madras. short Scheme) of Doosan Power Systems India Private Limited (hereinafter referred to as Petitioner Company or the Transferor LW.80.09.2012 Company) with Doosan Chennai Works Private Limited (hereinafter referred to as Transferee Company). One of the terms IN RE: AVM CAPITAL SERVICES (P.) of the scheme is that upon sanction of amalgamation, the name of the transferee company will be changed and the memorandum LTD [BOM] and articles of association of the transferee company Co. Scheme Petition Nos. 670 to 675 of 2011, Co. amended/altered accordingly. Regional director took an objection Summons For Direction Nos. 598 To 603 of 2011 that this has to be done by following the specific procedure prescribed in the Act and not under the scheme of amalgamation. S.J. Kathawalla, J. [Decided on 12/07/2012] Decision : Objection rejected and scheme sanctioned. Companies Act, 1956 - sections 391 and 394 - amalgamation - Reason promoter holding shares in transferor companies and also in In reply to the abovesaid objection, it is submitted by the petitioner transferor company - Scheme proposed to achieve this that the approval of the Scheme in terms of Section 391-394 of the indirect shareholding of the promoter to become direct - Lone Act is a Single Window Clearance and no further fact on the part objector objected on the ground of tax avoidance - whether of Transferee Company is required to be done after the approval tenable -Held, No. of the Scheme, for giving effect to the alteration in the Memorandum of Association and change in Name of the Brief facts Transferee Company. Further, reliance upon the order dated By the above Company Scheme Petitions, sanction of this Court is 18.7.2011 passed by this Court in the matter of BSK Engineers Pvt. Ltd. (Company Petition NO.44/2011), wherein similar September ( LW-98 ) 1149 CHARTERED SECRETARY 2012 ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 80

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sought under Sections 391 to 394 read with Sections 80, 100 to objective, they cannot be faulted for the same. 103 of the Companies Act, 1956, to the scheme of arrangement The purpose of the Scheme is to provide long term stability and whereunder the five Companies AVM Capital Services Private transparency in the Transferee Company. The Transferor Limited (ACPL); Chevy Capital Services Private Limited (CCSPL); Companies are in existence since 1975. It was felt that it would be PM Capital Services Private Limited (PCSPL); Pranit Trading in the interest of the Transferee Company to merge the five Private Limited (PTPL); and Viramrut Trading Private Limited Transferor Companies with the Transferee Company, and to (VTPL) (the Transferor Companies) are sought to be merged with enable the Promoter thereof to hold shares directly in the Unichem Laboratories Limited (ULL) (the Transferee Company). Transferee Company rather than indirectly. The object of the Pursuant to the Scheme, the entire undertaking of the Transferor Scheme is not to avoid any tax. Even today the shares are Companies would stand vested with the Transferee Company. owned/controlled by the same Promoter albeit through the The Scheme was approved by an overwhelming majority of Transferor Companies. Under the Scheme the only difference is 99.99% in value of the shareholders present and voted. The that the Promoter will now hold shares directly in the Transferee Objector was the only share holder who opposed the Scheme.The Company. It is correctly submitted by the Transferee Company first, and the main objection of the Objector is that the Scheme is that there is nothing illegal or unlawful or dubious or colourful in the propounded to avoid capital gains tax that would have arisen if the Scheme and the same is a perfectly legitimate scheme and Transferor Companies would have directly transferred their shares permissible by law. Therefore, the objection of the Objector that to the Promoters. the Scheme is a tax avoidance device and ought not to be Decision : Scheme sanctioned. approved, stands rejected. Reason LW.81.09.2012 I have considered the main charge of the Objector that the Scheme is a device for avoidance of tax, and have also considered V the submissions advanced on behalf of the Petitioners in response ROAD BUILDER (M) SDN BHD . TANTIA to this charge. CONSTRUCTIONS LTD [CAL] In view of the observations of the Hon'ble Supreme Court in the A.P.O. No. 118 of 2012 & C.P. No. 366 of 2011 Vodafone decision, the submission of the Objector herein that he is fortified by the decision in McDowell's case, and that the Ashim Kumar Banerjee & Shukla Kabir Sinha, JJ. decision in Azadi Bachao Andolan is per in curium or is contrary to [Decided on 31/07/2012] the decision in McDowell's case is rejected. The decision of the Section 434(1)(b) of the Companies Act, 1956 read with Order Gujarat High Court in the case of Wood Polymer Limited (supra) is 37 of the Code of Civil Procedure - Winding up petition by no longer good law, in view of the decision of the Supreme Court unsecured creditor - Respondent furnishing bank guarantee - in the case of Azadi Bachao Andolan and Vodafone International winding up court relegated parties to civil suit - whether Holdings (supra). tenable - Held,Yes. As regards the submission of the Objector that this Court should direct the Transferee Company to implead the income tax authority Brief facts as a necessary party, in my view, the income tax authority is not The parties entered into a joint venture agreement for setting up a required to be heard while sanctioning the Scheme under Section project in the State of Mizoram. However, the joint venture did not 391-394 of the Companies Act, 1956. materialise. The appellant thereafter agreed to sell its plant, The Objector has also raised a grievance that the shares of the machinery, vehicles and all other equipments arranged for the said Transferee Company held by the Transferor Companies which are project to the respondent at and for a sum of Rs.2,75,73,614/-. purely tradable and transferable without any restrictions cannot be They accordingly agreed on terms for sale and prepared a transferred through the present Scheme of Arrangement. As schedule containing 47 items of plant and machinery and 18 submitted on behalf of the Petitioners, the Promoters are not vehicles including two-wheelers and four-wheelers and an looking for an exit from the Transferee Company through agreement was entered into by the company to the said effect. The divestment and have adopted one of the available methods for respondent paid a sum of Rs.5 lacs as first instalment. It was reorganizing their shareholding. In the case of scheme of agreed that they would make payment of the purchase price at a arrangement between Tata Services Limited and Tatanet services monthly instalment of Rs.20 lacs except the last instalment. The Limited, wherein a commercial division of Tata Services Limited instalments were payable on the 15th day of each English was proposed to be transferred, the Regional Director had calendar month and default would attract interest at the rate of 12 objected that the transfer could be achieved through compliance of per cent per annum. The company paid diverse sums from time to the provisions of Section 293(1)(a) of the Companies Act, 1956. time, aggregating to Rs.48 lacs and defaulted balance sum of This Court dealing with the said objection has held that if the Rs.2,27,73,614.41p that attracted an additional sum of Petitioners have adopted an elaborate route to achieve the Rs.64,28,359/- as and by way of interest up to March 31, 2011. 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2011. The company replied to the same on May 16, 2011 being controversy we might exercise our discretion contrary to what was dealt with in a rejoinder by the appellant issued on June 8, 2011. observed by the learned Single Judge. Being a Court of Appeal we The company denied its liability as according to them money did are not competent to do so. The duty of the Court of Appeal is to not become due and payable in absence of "No Objection see whether discretion is properly and judiciously exercised by the Certificate" being issued by the appropriate authorities enabling Learned Judge. If the result of the test is positive interference is not the respondent company to register the vehicles in their name. warranted. We cannot substitute our independent views on the There are other issues to raise by the company. The appellant filed controversy sitting in a Court of Appeal. It is nobody’s case that the a winding up petition that was contested by the company, taking discretion was used perversely or de hors the Statute. identical stand as they took in their reply to the statutory notice of demand. The learned Judge considered the defence and held that LW.82.09.2012 company was unable to disclose any bona fide defence. The learned Judge gave opportunity to the company to secure the INDO RAMA TEXTILE LTD V. INDO RAMA claim by way of a Bank Guarantee and the respondent furnished SYNTHETICS LTD [DEL] the same. Then, the court relegated the parties to civil suit. Aggrieved, appellant appealed to the Division Bench. Co. Appl. 762/2009 Decision : Appeal dismissed. Manmohan, J. [Decided on 23/07/2012] Reason Companies Act, 1956 read with Income tax Act,1961-Demerger- We have considered the rival contentions. Concept of bona fide Certain common facilities were retained by the demerged dispute was discussed by the learned Single Judge in the case of company- resulting company was allowed to use the common Kiranmayee Devi reported in 49 Calcutta Weekly Notes Page-246. facilities on payment of charge to the demerged company- due His Lordship set out five eventualities to deal with the concept of to non payment of charges demerged company withdrew the bona fide dispute in a summary trial under Order 37 of Code of common facilities- Resulting company sought modification of Civil Procedure. Same analogy would be applicable in the case of the scheme to compulsorily transfer the common facilities to it- a winding up proceeding at the instance of an unsecured creditor. whether tenable-Held,No. The fifth eventuality so pointed out by His Lordship as quoted below in Kiranmayee Devi (Supra) would adequately cover the Brief facts present controversy. Indo Rama Synthetics Ltd (IRSL) had two units viz Spinning unit "(e) If the defendant has no defence or the defence is illusory or and Polymer unit. It demerged the spinning unit to the resulting sham practically moonshine then although ordinarily the plaintiff is company Indo Rama Textile Ltd (IRTL) in the year 2003. In the entitled to leave to sign judgment, the Court may protect the said scheme of demerger IRSL retained certain common facilities, plaintiff by only allowing the defence to proceed if the amount including a housing colony, with it and a Memorandum of claimed is paid into Court or otherwise secured and give leave to Understanding was entered into between IRSL and IRTL to share the defendant on such condition and thereby show mercy to the these common facilities wherein IRTL was to pay certain charges defendant by enabling him to try to prove a defence." to IRSL. In the year 2007 IRSL demanded more charges from If we look to the statute itself we would find that any unsecured IRTL for the use of common facilities which IRTL refused to pay claim as soon as it is secured, would debar a winding up and IRSL withdrew the common facilities. Consequently IRSL proceeding being brought by the creditor, no matter whether the invoked the arbitration clause of the MoU in 2009 and appointed a claim was bona fide or not. In the instant case, statutory notice of sole arbitrator. IRTL approached the court to terminate the demand was replied to by the company. The company put up a mandate of the arbitrator but the court rejected its application. defence. Learned Judge was not satisfied, even then he wanted to On 27th May, 2009, Applicant applied under Section 392(1)(b) of give an opportunity to the company to show their bona fide. It is Act, 1956, to this Court seeking a restraint order against rather an extension of the benefit which the company could respondent-IRSL from disturbing the Applicant’s possession or otherwise avail under the statutory provisions so discussed above. withdrawal of facilities. The company duly availed such benefit and secured the claim. The Decision : Application disposed of. order reached finality being acted upon. The matter may be viewed from another angle. In a case where a Reason litigant invokes the discretionary power of the learned Judge and Having heard the parties at length, this Court is of the view that the the learned Judge uses such power in one way the litigant cannot Scheme of Arrangement sanctioned by this Court in 2003 has to complain that it should have been other way round unless such be read as a whole and not in a piecemeal manner. In fact, upon exercise was so perverse that it would require correction by the reading the Scheme of Arrangement in its entirety, in particular Court of Appeal. Right to claim winding up as statutorily provided, Clauses 1.1(vii), 3, 6, 24 along with the Schedules and map is a discretionary remedy. Learned Single Judge exercised annexed to it, this Court has no hesitation in concluding that the discretion in one way. If we independently consider the September ( LW-100 )1151 CHARTERED SECRETARY 2012 ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 82

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Housing colony as well as common utilities were specifically requirement for all schemes of amalgamation/arrangement/de- agreed to be retained and owned by respondent-IRSL. The merger under Sections 391/392/394 of the 1956 Act. The said properties, buildings and assets that were transferred to IRTL provision cannot be read and interpreted to include under the Scheme of Arrangement were specifically mentioned in assets/units/undertakings/business belonging to the respondent- its Schedules 1 and 2. IRSL which were never transferred or intended to be transferred to This Court is of the view that shareholders and creditors of IRTL and which are not mentioned in the Scheme of Arrangement. respondent-IRSL and IRTL gave their consents to the Scheme of In the opinion of this Court, the Applicant is in error in contending Arrangement knowing fully well that common utilities and housing that the common infrastructure is liable to be made over to them by colony would continue to be retained and owned by the virtue of reasoning of Section 2(19AA) of the Act, 1961 as the respondent- IRSL. division of assets was indicated in the Scheme. Even the Applicant before entering into the share purchase From the aforesaid, it is apparent that in the proceedings under agreement was aware of the Memorandum of Understanding Section 392(1)(b) of the Act, 1956, the Court cannot rewrite the dated 28th July, 2005, which specifically stated that housing scheme approved in the meeting called under Section 391(2) of colony was being offered by respondent-IRSL as a resource to the Act, 1956; but, it can only make such modification as it may IRTL for five years upon payment of actual cost. In the opinion of consider necessary for proper working of the compromise or this Court, if respondent-IRSL was not the owner of the common arrangement. resources and infrastructure, there was no question of it offering It is pertinent to mention that when the scheme was sanctioned in the common assets for use to IRTL on payment of cost. the year 2003, both the Transferor and Transferee Companies In fact, it is settled legal position that there is no requirement under were owned and managed by O.P. Lohia group but now both the the provisions of the 1961 Act, or 1956 Act for transfer of all entities are owned and managed by different business groups. common assets and/or liabilities relatable to the Undertaking being Consequently, to ensure that the scheme sanctioned by this Court demerged. The Applicant's submission that all common assets that is properly implemented, this Court modifies only the dispute cannot be divided must be transferred to the transferee namely, redressal mechanism in Clause 36 of the Scheme by directing that IRTL overlooks the explicit language of Section 2(19AA)(i) of the in the event of any dispute, doubt or issue arising between the Act, 1961, which states that ''all the properties of the undertaking parties, the same shall be referred to a sole arbitrator to be being transferred by the demerged company, immediately before appointed with the consent of the parties. If, however, no the demerger becomes the property of resulting company by virtue consensus is reached between the parties, then the sole arbitrator of the demerger''. The expression ''being transferred'' is relatable shall be appointed by the concerned Court. to such assets as are being transferred to make it a going concern. Moreover, if the applicant's submission is accepted it would put all the schemes of demerger in a 'straightjacket' format and it would also infringe upon the two company's freedom to negotiate with regard to the transfer of common assets. This Court is of the view that while framing a scheme of demerger, the existing and the resulting companies after ensuring that both of them are a going General concern, are free to negotiate which common asset/liability would be transferred to which undertaking. After all, it is on this asset/liability transfer basis that share swap ratio are assessed, determined and allotted. Laws The Applicant's submission also overlooks the primary function of the Company Court, namely, to ensure that the Scheme serves larger public interest, that means, to ensure both the existing and LW.83.09.2012 resulting unit are economically and technically viable. Consequently, merely because certain common assets and NIHALI DEVI V. STATE GOVT. OF NCT OF liabilities have not been transferred, the transaction would not DELHI & ANR [SC] cease to be demerger of an Undertaking, provided the assets and liabilities transferred, by themselves, constitutes a running Criminal Appeal No. 1100 of 2012 (Arising out of SLP business and the business can be carried on uninterruptedly with (Crl.) No. 8941 of 2011) such assets and liabilities alone. Consequently, the contention urged by the Applicant that in view of Aftab Alam & H.L. Gokhale, JJ. [Decided on 25/07/2012] Section 2(19AA) of the 1961 Act the Scheme of Demerger must necessarily comply with Section 2(19AA) which is meant for Negotiable Instruments Act, 1881 - Section 138- accused availing tax concession cannot be read as a mandatory convicted and sentenced- she paid the penalty during the September proceedings- whether sentence can be annulled-Held,yes. 2012 CHARTERED SECRETARY1152 ( LW-101) ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 83

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W P (C) No.7418/2011 Brief facts S Ravindra Bhat & R V Easwar, JJ. The Appellant is convicted Under Section 138 of the Negotiable Instruments Act, 1881. She was sentenced by the trial court to two [Decided on 20/07/2012] years' simple imprisonment; in addition she was also directed to Foreign Trade Development Act, 1992 - Section 15 - revalidation pay a sum of Rs. 1,20,000/- to the complainant as compensation. of scrip - goods landed in India after the validity period - In appeal, the conviction and sentence was maintained and her whether entitled for revalidation - Held,No. revision before the High Court was dismissed as barred by limitation by 565 days. Brief facts Decision Appeal allowed. The petitioner claims a direction in the nature of mandamus to the first respondent to issue instructions to revalidate its scrip which Reason entitled it to customs duty concessions for a period of six months The relevant facts are that the Appellant is a woman and is over 66 in terms of Serve From India Scheme (SFIS). The beneficiaries of years of age. Before the trial court she actually admitted her liability that policy, like the petitioner are entitled to exemption from to pay the amounts of the two cheques. It, however, appears that it customs duty in respect of capital goods imported during the was on account of her highly strained financial condition that she was period of the scrip’s authorization. In this case, the scrip was unable to make the payment. Her two sons had died earlier. During issued to the petitioner on 15.04.2009 and was valid in terms of the the pendency of the appeal her daughter who was suffering from scheme till 30.04.2011. cancer was undergoing treatment and understandably the Appellant The petitioner, who had availed of the facility of the customs duty was all through by her bed side. The daughter finally passed away exemption in terms of the SFIS, had apparently entered into on April 15, 2011. Even in those circumstances she was trying to pay contract for purchase of certain equipment from Italy on 18.4.2011. the compensation amount to the complainant, even though in small The goods were shipped on 18.04.2011 from Antwerp and landed instalments. In that position, it is not difficult to imagine that she was at the Inland Container Depot, Faridabad on 26.05.2011. By this unable to follow the proceedings in the appeal and was not even time, the validity of the scrip had expired (on 30.04.2011). The aware when it was finally dismissed. That was one of the reasons for petitioner was, therefore, required to pay duty. The petitioner the delay in filing the revision before the High Court which the High sought revalidation of the scrip under the SFIS, which was turned Court, unfortunately, did not take into account. down by the Policy Relaxation Committee (PRC) on 29.08.2011. At the time of filing the special leave petition she had deposited a Decision : Petition dismissed. sum of Rs. 50,000/- out of the compensation amount of Rs. 1,20,000/-. Hence, this Court directed her to deposit the remaining Reason amount of Rs. 70,000/- as the condition to allow her prayer for This Court has considered the submissions of the parties. The exemption from surrendering. She filed proof of deposit of the terms of the SFIS and the authorization issued under it were clear remaining amount on October 18, 2011, and the full amount of i.e. that the benefits could be availed for the period of two years. In compensation i.e. Rs. 1,20,000/- now remains deposited in the court case of shipment on high seas, the policy provided the extension below which the complainant -Respondent No. 2 is free to withdraw. of concession if the validity period lapsed when the shipment had In the aforesaid facts and circumstances, it appears to us that the landed at any Indian port. In other words, in the present case, if the sentence of two years' imprisonment given to the Appellant is goods had reached in the port of India by the date of expiry of the unduly harsh. It is clear to us that she is a victim of tragic authorization i.e.30.04.2011, the petitioner could have qualified for circumstances and she never intended not to repay the amounts extension to facilitate their clearance. However, such was not the for which she issued the two cheques in favour of Respondent No. case. The goods in fact reached on 26.05.2011 - a fact known to 2. We, accordingly, set aside the sentence of imprisonment the petitioner when it booked them after entering into contract with awarded to the Appellant and substitute it by a fine of Rs. 25,000/- the foreign supplier, on 18.04.2011. Having regard to these which, she must pay within four months from today, failing which circumstances, the respondents' action directing payment of full she will have to undergo simple imprisonment for 15 days. Out of duty and refusal to give the benefit cannot be characterized as the amount of fine, if deposited, Rs. 20,000/- will be paid to the unreasonable. complainant, which he would be free to withdraw. It was brought to the notice of the Court that the order of the Policy In the result, the appeal is disposed of with the aforesaid Relaxation Committee (PRC) is appealable under Section-15 of modification and reduction in the Appellant's sentence. the Foreign Trade Development Act, 1992 to the Central Government. This Court is of the opinion that the petitioner should LW.84.09.2012 be permitted to avail of that remedy. In case there is any delay, the said authority shall consider the appeal on its merits provided the PSG STEEL PVT LTD V. UNION OF INDIA & petitioner approaches it within a period of two weeks from today. ORS [DEL] September ( LW-102 ) 1153 CHARTERED SECRETARY 2012 ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 84

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In view of the above conclusions, this Court is of the opinion that to provide any valid guidelines because both the decisions were the relief claimed cannot be granted. rendered in ignorance of earlier larger Bench decisions of this Court by which the issue was concluded. As early as in 1975 a four Judge Bench of this Court in Pratap Narain Singh Deo. v. Shrinivas Sabata and Anr., AIR 1976 SC 222 and in Kerala State Electricity Board v. Valsala K., AIR 1999 SC 3502 directly answered the question. In light of the decisions in Pratap Narain Singh Deo and Valsala it Labour & is not open to contend that the payment of compensation would fall due only after the Commissioner's order or with reference to the date on which the claim application is made. The decisions in Mubasir Ahmed and Mohd. Nasir insofar as they took a contrary Industrial Laws view to the earlier decisions in Pratap Narain Singh Deo and Valsala do not express the correct view and do not make binding precedents. LW.85.09.2012 LW.86.09.2012 THE ORIENTAL INSURANCE CO LTD. V. SIBY M/S AMBICA RUBBER INDUSTRIES & ANR V. GEORGE & ORS [SC] RAJENDER YADAV & ANR [DEL] Civil Appeal No. 5669 of 2012 (Arising out of SLP (C) No.9516 of 2010) W.P. (C) 14695-96/2006 Aftab Alam & Ranjana Prakash Desai, JJ. P.K.Bhasin, J. [Decided on 30/07/2012] [Decided on 31/07/2012] Industrial Disputes Act, 1947- dismissal of workman-labour Workmen Compensation Act, 1923 - Sections 4(A)(1) and court directed reinstatement and 50% back wages- whether 4(A)(3)-Supreme Court reiterated the law as to when the tenable-Held,Yes. compensation under the act and interest thereon becomes payable. Brief facts By way of this writ petition the petitioner-employer had challenged Brief facts the award whereby the relief of re-instatement in service with 50% The short question that arises for consideration in this appeal is back wages was granted to the respondent-workman by the when does the payment of compensation under the Workmen's Labour Court as also the order dated 3.4.2006 whereby review Compensation Act, 1923 (hereinafter the Act) become due and petition filed by it for recalling the award on the ground that it was consequently what is the point in time from which interest would be passed without hearing any arguments from its side was also payable on the amount of compensation as provided under section dismissed. 4-A (3) of the Act. Decision : Petition dismissed. In this case, the Commissioner for Workmen's Compensation directed for payment of simple interest at the rate of 12% per Reason annum from the date of the accident on July 12, 2006. The After having gone through the impugned award and the arguments appellant's appeal against the order of the Commissioner was made on behalf of the petitioner I find myself unable to agree with dismissed by the Kerala High Court as barred by limitation. Against the learned counsel for the petitioner. The Labour Court has after the order of the High Court the appellant filed the special leave proper appreciation of evidence adduced from both the sides come petition giving rise to this appeal. to the conclusion that this is not a case of abandonment of job by Decision : Appeal dismissed. the respondent. This Court does not find any perversity in that conclusion. Just because the respondent-workman had taken Reason some advance and not returned, though he had denied having Now, coming back to the question when does the payment of received any advance, it could not be inferred from that that he had compensation fall due and what would be the point for the abandoned his job. He had worked for more than ten years and so commencement of interest, it may be noted that neither the it cannot be expected that suddenly he would leave the job only to decision in Mubasir Ahmed nor the one in Mohd. Nasir can be said avoid payment of some money to his employer. He had in fact immediately in December, 1996 written to the petitioner that he September had been illegally removed from service. Then he had approached 2012 CHARTERED SECRETARY 1154 ( LW-103) ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 85

Legal World

the Labour Authorities also claiming reinstatement. That conduct against for having committed contempt of court. of the respondent negatives any intention on his part to abandon Decision : Appeal allowed. his 10 years old job and even because of his alleged absence from 1.11.96 it could not be inferred that he did not want to work with the Reason petitioner any more. The petitioner did not even call upon her to Without going into the question of whether the non-compliance resume his duties which it would have done in case it had not was intentional and/or wilful, the court could not, simply because terminated his services. So, no fault can be found with the findings there was non-compliance, dismiss the writ petition and initiate of the Labour Court that the services of the respondent was contempt proceedings. We note from the order in appeal that while terminated by the petitioner illegally. Compliance of Section 25-F the submission of the learned counsel for the appellant was had to be done by the petitioner even if some money was to be recorded, there is no finding returned by the learned Single Judge taken by it from the respondent and particularly when the petitioner as to whether the non-compliance was intentional and wilful or not. is not claiming that that amount was allowed to be retained by the Despite the fact that there is no such finding, the learned Single respondent as compensation etc. payable under Section 25-F. The Judge went on to dismiss the writ petition and also initiate submission of the learned counsel for the petitioner that since its contempt proceedings against the proprietor of the appellant. This, Unit stands closed since long and so reinstatement is not possible in our view, was an error. now, cannot be entertained since it was not taken before the The issue also stands settled by a decision of a Division Bench of Labour Court even though its case now is that its Unit had already this court in the case of DTC v. Gurcharan Singh, LPA been shut down when the respondent had raised the dispute. No.132/2012 decided on 30.03.2012. We concur with the said However, as far as the direction given to the management to pay reasoning and do not feel the need to discuss the matter any to the respondent-workman wages from January, 2006 till 9-11-96 further. is concerned the same appears to be a typing mistake and actually In view of clear enunciation of the settled principles, the writ the wages were intended to be given from 1/11/2006 onwards and petition could not have been dismissed merely because there was that mistake is corrected here. To that extent the award would non-compliance of an order passed under Section 17B of the said stand corrected but otherwise the writ petition is dismissed. Act. Furthermore, such non-compliance could also not lead to the initiation of contempt proceedings. Consequently, following the LW.87.09.2012 said decision in the case of Gurcharan Singh (Supra) we allow this appeal and set aside the impugned order dated 18.01.2012 and MOHIT ELECTRONICS V. WORKMAN TAHIR remit the matter to the learned Single Judge for a decision in accordance with law. The respondent has a remedy under Section HUSSAN [DEL] 33C (2) of the said Act which he may pursue, in accordance LPA.No. 71/2012 with law. Badar Durrez Ahmed & Siddharth Mridul, JJ. SPECIAL ISSUES OF [Decided on 25/07/2012] CHARTERED SECRETARY Industrial Disputes Act, 1947 - Section 17(B) - labour court directed payment of wages- management appealed to High It is proposed to bring out special issues of Chartered court without complying with the said orde r- High court Secretary on the following topics during the remaining period of the year 2012: dismissed the appeal and commenced contempt proceedings - 1. Attitudinal shift in the functioning of Corporates and Whether correct - Held, No. Company Secretaries - October 2012 issue and 2. Corporate Restructuring and Insolvency - December Brief facts 2012 issue. This appeal is directed against the judgment/order dated Members and others having expertise on the aforesaid 18.01.2012 passed by a learned Single Judge of this court in CM subjects are welcome to contribute articles for No.21618/2010 and WP(C) No.6284/2004 whereby the writ consideration by the Editorial Advisory Board for petition of the appellant herein was dismissed on the ground that publication in the said special issues. there was non-compliance of an order passed under Section 17B of the Industrial Disputes Act, 1947 inasmuch as the allegation The articles may kindly be forwarded to: was that the appellant had not complied with the said order by not The Deputy Director (Publications), The ICSI, 22, paying wages to the respondent from August 2008 onwards. By Institutional Area, Lodi Road, New Delhi 110003. virtue of the impugned order contempt proceedings were also E-Mail: [email protected] initiated and the appellant’s proprietor Mr Ravinder Kumar who copy to . was present in court on the date on which the impugned order was passed was directed to show cause as to why he be not proceeded September ( LW -104 )1155 CHARTERED SECRETARY 2012 ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 86

From the Government

It is hereby clarified that any employee of a company holding shares of the company upto 0.5% of paid up share capital Corporate thereof under any scheme formulated for allotment of shares to such employees including under Employees' Stock Option Plan or by way of qualification shares are also covered under the category of persons not having any interest in the capital Laws of the company in terms of the Ministry's notification GSR 534(E) dated 14.07.2011. L. K. Trivedi Under Secretary

Amendment to Notification Number 02 G.S.R. 501(E) dated 6th July, 1999

[Issued by the Ministry of Corporate Affairs vide Notification No. G.S.R. 617(E) Dated 07.08.2012.]

1. In exercise of the powers conferred by sub-section (1) of section 642, read with sub-section (2) of section 637A of the Companies Act, 1956 (1 of 1956), the Central Government hereby amends the notification of the Government of India in the erstwhile Ministry of Law, Justice and Company Affairs (Department of Company Affairs) number G.S.R. 501(E), dated the 6th July, 1999 published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), dated the 6th July, 1999, namely:-

Gazette notification GSR 534(E) 2. In the said notification, after sub-rule (3), and Table-III, the 01 dated 14/07/2011- clarification following sub-rule (4) and Table-IV shall be inserted, regarding. namely:- “(4) In case of delays in filing applications with the [Issued by the Ministry of Corporate Affairs vide Central Government under sub-section (2) of section F.No. 14/11/2012-CL-VII Dated 16.08.2012.] 233B of the said Act, the fee as specified in the Table- IV below shall be applicable: I am directed to refer to the Gazette Notification No. GSR 534(E) dated 15th July, 2011 whereby companies were Table - IV exempted from obtaining the approval of the Central Government for payment of remuneration exceeding the Period of Delay Fee Payable with the limits imposed by the Companies Act, 1956 in respect of the Application managerial persons not having any interest in the capital of Upto 30 days Two times of normal fee the company and not related to the directors or promoters More than 30 days and Four times of normal fee thereof. upto 60 days In this regard, a number of representations have been More than 60 days and Six times of normal fee received from stakeholders pointing to the corporate practice upto 90 days of allocating shares by way of qualification shares and/ or More than 90 days Nine times of normal fee shares under any scheme for allotment of shares to the employees of the company including under Employees' Note: Normal fee means the fee as given in the Table-I Stock Option Plan (ESOP). above.” B. B. Goyal Adviser (Cost) September 2012 CHARTERED SECRETARY 1156 ( GN-185 ) ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 87

From the Government

Product or Activity Groups for Cost Annexure 03 Audit Report and Compliance Report to Serial Product or Name of the Product Central Excise Tariff Act be filed with the Central Government Number Activity or Activity Group (CETA) Chapter Headings Group Code covered in the Product or [Issued by the Ministry of Corporate Affairs vide Activity Group Notification No. S.O. 1747(E) Dated 07.08.2012.] 1 1001 Livestock 0101 to 0106 2 1002 Meat and Meat Products 0201 to 0210; 0410; 1601 1. In exercise of the powers conferred by clause (b) of sub- to 1603 3 1003 Marine Products 0301 to 0307; 1604 to 1605 section (1) of section 642 read with section 610B of the 4 1004 Milk and Milk Products 0401 to 0406 Companies Act, 1956 (1 of 1956), the Central Government 5 1005 Poultry and Related Products 0407 to 0408 hereby constitutes the Product or Activity Groups as given 6 1006 Bee Products 0409 in the Annexure enclosed. 7 1007 Human Hair and Related Products 0501; 6703 to 6704 8 1008 Products of Animal Origin 0502; 0504 to 0508; 0510 2. Pursuant to the above, all companies shall use the Product to 0511 or Activity Groups as given in the Annexure, wherever it 9 1009 Plants, Trees and Flowers 0601 to 0604 appears, in the Cost Audit Report and in the Compliance 10 1010 Vegetables 0701 to 0714 11 1011 Fruits and Nuts 0801 to 0814 Report to be filed with the Central Government in 12 1012 Coffee and Coffee Products compliance with the following rules, namely:- (incl. 210111) 0901 a) The Companies (Cost Accounting Records) Rules, 13 1013 Tea and Tea Products 2011 notified vide GSR 429(E), dated the 3rd June, (incl. 210120) 0902 14 1014 Spices - processed or unprocessed 0903 to 0910 2011; 15 1015 Cereals, Flour and Product of Cereals 1001 to 1008; 1101 to 1109 b) The Companies (Cost Audit Report) Rules, 2011 16 1016 Oil Seeds and Products of Oil Seeds 1201 to 1208 17 1017 Other Seeds and Plants 1209 to 1214 notified vide GSR 430(E), dated the 3rd June, 2011; 18 1018 Vegetable Saps or Products 1301 to 1302; 1401; 1404 19 1019 Animal or Vegetable Fats and Oils 1501 to 1518; 1520 to c) The Cost Accounting Records (Telecommunication 1522 Industry) Rules, 2011 notified vide GSR 869(E), dated 20 1020 Sugar and Sugar Products 1701 to 1702 21 1021 Molasses 1703 the 7th December, 2011; 22 1022 Sugar Confectionery or Chocolates 1704; 1806 23 1023 Cocoa Products 1801 to 1805 d) The Cost Accounting Records (Petroleum Industry) 24 1024 Prepared Food Products 1901 to 1905; 2001 to Rules, 2011 notified vide GSR 870(E), dated the 7th 2009; 2101 to 2106; 2501 25 1025 Mineral Water and Aerated Drinks 2201 to 2202 December, 2011; 26 1026 Alcoholic Beverages 2203 to 2206; 2208 27 1027 Ethyl Alcohol and other Spirits 2207 e) The Cost Accounting Records (Electricity Industry) 28 1028 Vinegar 2209 29 1029 Food Residues or Prepared Animal Rules, 2011 notified vide GSR 871(E), dated the 7th Feed 2301 to 2309 December, 2011; 30 1030 Unmanufactured and Manufactured Tobacco 2401; 2403 f) The Cost Accounting Records (Sugar Industry) Rules, 31 1031 Tobacco Products 2402 32 2001 Mineral Products 2502 to 2522; 2524 to 2011 notified vide GSR 872(E), dated the 7th 2526; 2528 to 2530; 2601 December, 2011; to 2621 33 2002 Cement 2523 34 2003 Mineral Fuels g) The Cost Accounting Records (Fertilizer Industry) (other than Petroleum) 2701 to 2708 Rules, 2011 notified vide GSR 873(E), dated the 7th 35 2004 Petroleum Oils - Crude 2709 December, 2011; 36 2005 Petroleum Oils - Refined 2710 37 2006 Petroleum Gases and other Gaseous Hydrocarbons 2711 h) The Cost Accounting Records (Pharmaceutical 38 2007 Other Petroleum Products 2712 to 2715 Industry) Rules, 2011 notified vide GSR 874(E), dated 39 2008 Electrical Energy 2716 the 7th December, 2011. 40 2009 Chemical Elements 2801 to 2805 41 2010 Inorganic Chemicals and their 2806 to 2837; 2839 to Derivatives 2850; 2852 to 2853 3. The Product or Activity Group as given in the Annexure 42 2011 Organic Chemicals and their shall also be used, wherever so desired by the Central Derivatives (excluding Bulk Drugs) 2901 to 2942 Government, in respect of any other document required to 43 2012 Bulk Drugs 2901 to 2942 44 2013 Albuminoidal Substances, Starches, be filed either with the Registrar or with the Central Glues and Enzymes 3501 to 3507 Government in compliance with any provisions of the Companies Act, 1956 (1 of 1956). September ( GN -186 ) 1157 CHARTERED SECRETARY 2012 ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 88

From the Government

45 2014 Miscellaneous Chemical Products 3801 to 3807; 3809 to 3825 100 3031 Footwear and Parts thereof 6401 to 6406 46 2015 Pharmaceutical Products 3001 to 3006 101 3032 Headgear and Parts thereof 6501 to 6502; 6504 to 6507 47 2016 Animal or Vegetable Fertilizers 3101 102 3033 Umbrellas, Sticks etc. 6601 to 6603 48 2017 Mineral or Chemical Fertilizers - 103 3034 Articles of Skins and other parts of Nitrogenous 3102 birds 6701 49 2018 Mineral or Chemical Fertilizers - 104 3035 Artificial Flowers and Fruits 6702 Phosphatic 3103 105 3036 Articles of Stones, Plaster, Cement, 50 2019 Mineral or Chemical Fertilizers - Asbestos and Mica 6801 to 6815 Potassic 3104 106 3037 Ceramic Products 6901 to 6914 51 2020 Mineral or Chemical Fertilizers - 107 3038 Glass and Glass Products 7001 to 7011; 7013 to 7020 Others 3105 108 3039 Pearls, Diamonds, Stones and 52 2021 Tanning Substances 3201 to 3202 Jewellery Articles 7101 to 7118 53 2022 Colours, Dyes and Pigments 3203 to 3207; 3212 109 4001 Primary Ferrous Materials 7201 to 7205 54 2023 Paints and Varnishes 3208 to 3211 110 4002 Iron and Non-Alloy Steel 7206 to 7217 55 2024 Inks and Colours 3213; 3215 111 4003 Stainless Steel 7218 to 7223 56 2025 Plasters and Fillers 3214 112 4004 Other Alloy or Non-Alloy Steel 7224 to 7229 57 2026 Essential Oils 3301 to 3302 113 4005 Steel Products 7301 to 7326 58 2027 Personal Care Products 3303 to 3307; 8212; 9615 114 4006 Copper and Copper Products 7401 to 7413; 7415; 7418 to 9616 to 7419 59 2028 Soaps, Detergents and Cleaning 115 4007 Nickel and Nickel Products 7501 to 7508 Agents 3401 to 3402 116 4008 Aluminium and Aluminium Products 7601 to 7616 60 2029 Lubricating Preparations 3403 117 4009 Lead and Lead Products 7801 to 7802; 7804; 7806 61 2030 Waxes and Wax Products 3404 to 3407 118 4010 Zinc and Zinc Products 7901 to 7905; 7907 62 2031 Explosives 3601 to 3603 119 4011 Tin and Tin Products 8001 to 8003; 8007 63 2032 Fireworks, Matches and Combustible 120 4012 Other Base Metals and their Products 8101 to 8113; 8301 to 8311 Materials 3604 to 3606 121 4013 Hand Tools 8201 to 8211; 8213 to 8215 64 2033 Photographic and Cinematographic 122 4014 Nuclear Reactors and Accessories 8401 Goods 3701 to 3707 123 4015 Boilers and Accessories 8402 to 8404 65 2034 Insecticides 3808 124 4016 Engines or Motors and parts thereof 8405 to 8412 66 2035 Chemicals - Plastics and Polymers 3901 to 3915 125 4017 Machinery and Mechanical appliances 8413 to 8484; 8486 to 8487 67 2036 Articles of Plastics and Polymers 3916 to 3926 126 4018 Electric Motors, Generators, 68 2037 Rubber and Rubber Products 4001 to 4010; 4014 to 4017 Transformers and Parts thereof 8501 to 8505 69 2038 Rubber Tyres and Tubes 4011 to 4013 127 4019 Batteries and Accumulators 8506 to 8507 70 3001 Raw Hides, Skins and Leather 4101 to 4107; 4112 to 4115 128 4020 Electrical and Electronic Equipments 8508 to 8519; 8521 to 71 3002 Leather Products 4201 to 4203; 4205 to 4206 or Appliances 8523; 8525 to 8548 72 3003 Furskins and Fur Products 4301 to 4304 129 4021 Railway Rolling Stock 8601 to 8606 73 3004 Wood and Wood Products 4401 to 4421 130 4022 Parts of Railway Rolling Stock 8607 74 3005 Cork and Cork Products 4501 to 4504 131 4023 Railway Track Fixtures and Fittings 8608 75 3006 Straw and Plaiting materials 4601 to 4602 132 4024 Containers 8609 76 3007 Pulp of Wood and other substances 4701 to 4707 133 4025 Commercial Vehicles (3 or more 8701; 8704 to 8707; 8709; 77 3008 Newsprint 4801 wheels) 8716 78 3009 Paper and Paperboard 4802 to 4813 134 4026 Passenger Vehicles (4 or more 79 3010 Articles of Paper and Paperboard 4814; 4816 to 4823 wheels) 8702 to 8703 80 3011 Printing and Publishing 4901 to 4911 135 4027 Parts and Accessories of Vehicles 8708; 8714 81 3012 Silk 5001 to 5003 136 4028 Tanks and Armoured Vehicles and 82 3013 Silk Yarn 5004 to 5006 parts thereof 8710 83 3014 Silk Fabrics 5007 137 4029 Passenger Vehicles (2 and 3 84 3015 Wool 5101 to 5105 Wheelers) - Motorised 8711; 8713 85 3016 Wool Yarn 5106 to 5110 138 4030 Passenger Vehicles (2 or 3 Wheelers) 86 3017 Wool Fabrics 5111 to 5113 - Non Motorised 8712; 8713; 8715 87 3018 Cotton 5201 to 5203 139 4031 Non-powered Aircraft and parts 88 3019 Sewing Thread 5204; 5401 thereof 8801; 8803 89 3020 Cotton Yarn 5205 to 5207 140 4032 Aircraft, Spacecraft and parts thereof 8802 to 8803; 8805 90 3021 Cotton Fabrics 5208 to 5212 91 3022 Other Textile Yarns or Fibers 5301 to 5303; 5305 to 5308 141 4033 Parachutes and Rotochutes 8804 92 3023 Other Textile Fabrics 5309 to 5311 142 4034 Ships and Boats 8901 to 8904 93 3024 Synthetic Yarns or Fibers 5402 to 5406; 5501 to 5511; 143 4035 Floating Structures 8905 to 8908 5601 to 5609 144 4036 Optical Equipments and parts thereof 9001 to 9005; 9012 to 94 3025 Synthetic Fabrics 5407 to 5408; 5512 to 5516 9013; 9033 95 3026 Carpets and textile floor coverings 5701 to 5705 145 4037 Photographic or Cinematographic 9006 to 9008; 9010 to 96 3027 Other Textile Fabrics or Products 5801 to 5811; 5901 to 5911; Equipment and parts thereof 9011; 9033 6301; 6305 to 6310 146 4038 Measuring Instruments and parts 97 3028 Knitted or Crocheted Fabrics 6001 to 6006 thereof 9014 to 9017; 9023 to 9033 98 3029 Apparel and Clothing 6101 to 6117; 6201 to 6217 147 4039 Surgical or Medical Instrument and 99 3030 Furnishings 6302 to 6304 parts thereof 9018 to 9022; 9033 148 4040 Clocks or Watches and Parts thereof 9101 to 9114 149 4041 Musical Instruments and Parts 9201 to 9202; 9205 to September thereof 9209 2012 CHARTERED SECRETARY 1158 ( GN-187 ) ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 89

From the Government

150 4042 Arms or Ammunition and Parts 192 5406 Transmission or distribution of thereof 9301 to 9307 electricity Not Applicable 151 4043 Medical or Vehicular or other Furniture 193 5411 Cargo and baggage handling activities Not Applicable and Mattress and parts thereof 9401 to 9404 194 5421 Service activities incidental to Not Applicable 152 4044 Lights and Fittings 9405 transportation 153 4045 Prefabricated Buildings 9406 195 5431 Storage and warehousing activities Not Applicable 154 4046 Toys, games and sports Equipments 9503 to 9508 196 5441 Port activities Not Applicable 155 4047 Stationery Items 9608 to 9612 197 5451 Rental services of transport vehicles Not Applicable 156 4048 Miscellaneous manufactured articles 9601 to 9607; 9613 to 198 5461 Tours and travel activities Not Applicable 9614; 9617 to 9618 199 6001 Banking services Not Applicable 157 4100 Ancillary products or activities not 200 6002 Non-banking financial services Not Applicable elsewhere specified As Applicable 201 6003 Investment banking services Not Applicable 158 5001 Construction of residential buildings Not Applicable 202 6004 Financial leasing services Not Applicable 159 5002 Construction of non-residential 203 6005 Services auxiliary to banking and buildings Not Applicable financial services Not Applicable 160 5003 Construction of highways, roads, 204 6006 Leasing or rental of tangible assets Not Applicable rails, bridges, etc. Not Applicable 205 6007 Leasing of non-financial intangible 161 5004 Construction of industrial and assets Not Applicable nonindustrial plants, structures and 206 6101 Life insurance services Not Applicable facilities Not Applicable 207 6102 Non-life insurance services Not Applicable 162 5005 Laying of pipelines, communication 208 6103 Reinsurance services Not Applicable and power lines Not Applicable 209 6104 Pension services Not Applicable 163 5006 Other construction activities not 210 6201 Brokerage and agency services Not Applicable elsewhere specified Not Applicable 211 6202 Market intermediaries' services Not Applicable 164 5051 Real estate development activities Not Applicable 212 6301 Postal services Not Applicable 165 5061 Architectural and engineering 213 6302 Courier services Not Applicable services Not Applicable 214 6401 Accounting, auditing and 166 5071 Construction and real estate related bookkeeping services Not Applicable services Not Applicable 215 6402 Management consulting services Not Applicable 167 5101 Basic telephone services - wired and 216 6403 Legal services Not Applicable WLL Not Applicable 217 6404 Human Resource placement and 168 5102 Cellular mobile telephone services - management services Not Applicable wireless and WLL Not Applicable 218 6405 Business support services Not Applicable 169 5103 Internet and broadband services Not Applicable 219 6406 Research and experimental 170 5104 National long distance services Not Applicable development services Not Applicable 171 5105 International long distance services Not Applicable 220 6407 Other professional services Not Applicable 172 5106 Public mobile radio trunk services Not Applicable 221 6501 Education services Not Applicable 173 5107 Global mobile personal 222 6502 Human healthcare services Not Applicable communication services Not Applicable 223 6503 Veterinary services Not Applicable 174 5108 Passive telecom infrastructure and 224 6504 Sports, amusement and recreational tower facilities Not Applicable activities Not Applicable 175 5109 Cable landing stations Not Applicable 225 6505 Other personal service activities Not Applicable 176 5121 Broadcasting and related services Not Applicable 226 6506 Other social services Not Applicable 177 5131 Performing art and entertainment 227 6601 Accommodation, food and beverage services Not Applicable services Not Applicable 178 5141 Other communication services not 228 6701 Collection and waste management elsewhere specified Not Applicable activities Not Applicable 179 5201 Publishing of newspapers, journals 229 6702 Dyeing, colouring, washing and and periodicals Not Applicable drycleaning services Not Applicable 180 5202 Book publishing Not Applicable 230 6703 General cleaning services Not Applicable 181 5203 Advertising services Not Applicable 231 6704 Installation, maintenance and repair 182 5204 News agency activities Not Applicable services Not Applicable 183 5301 Transportation of passengers - by 232 6705 Investigation and security services Not Applicable road Not Applicable 233 6706 Market research and public opinion 184 5302 Transportation of passengers - by rail Not Applicable polling services Not Applicable 185 5303 Transportation of passengers - by 234 6707 Packaging activities Not Applicable water Not Applicable 235 6708 Photographic services Not Applicable 186 5304 Transportation of passengers - by air Not Applicable 236 6801 Information technology (IT) and IT 187 5401 Transportation or distribution of enabled services Not Applicable goods - by road Not Applicable 237 6901 General public administration 188 5402 Transportation or distribution of services Not Applicable goods - by rail Not Applicable 238 7001 Any other service activity not 189 5403 Transportation or distribution of elsewhere specified Not Applicable goods - by water Not Applicable 239 8001 Wholesale trade of agricultural raw 190 5404 Transportation or distribution of materials and live animals Not Applicable goods - by air Not Applicable 191 5405 Transportation or distribution of goods - by pipeline Not Applicable September ( GN -188 ) 1159 CHARTERED SECRETARY 2012 ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 90

From the Government

240 8002 Wholesale trade of food, beverages and tobacco [includes fruits, Companies (Central Government’s) vegetables, dairy products, etc.] Not Applicable 04 General Rules and Forms (Fifth 241 8003 Wholesale trade of textiles, clothing and footwear Not Applicable Amendment) Rules, 2012 242 8004 Wholesale trade of household appliances, articles and equipments Not Applicable [Issued by the Ministry of Corporate Affairs vide 243 8005 Wholesale trade of miscellaneous F.No. 1/1/2003-CL V Dated 26.07.2012.] consumer goods Not Applicable 244 8006 Wholesale trade of construction In exercise of the powers conferred by sub-section (1) of materials and hardware Not Applicable 245 8007 Wholesale trade of chemical and section 642 read with section 610B of the Companies Act, pharmaceutical products Not Applicable 1956 (1 of 1956), the Central Government hereby makes the 246 8008 Wholesale trade of personal care following rules further to amend the Companies (Central products Not Applicable Government’s) General Rules and Forms, 1956, namely: – 247 8009 Wholesale trade of machinery, equipment and supplies Not Applicable 248 8010 Wholesale trade of solid, liquid and 1. (1) These rules may be called the Companies (Central gaseous fuels and related products Not Applicable Government’s) General Rules and Forms (Fifth 249 8011 Wholesale trade of ores, minerals, Amendment) Rules, 2012. metals and articles thereof Not Applicable 250 8012 Wholesale trade of stones, pearls and (2) These rules shall come into force with effect from the precious metals Not Applicable 12th August, 2012. 251 8013 Wholesale trade of other products not 2. In the Companies (Central Government’s) General Rules elsewhere specified Not Applicable 252 9001 Retail trade of agricultural raw and Forms, 1956, in Annexure ‘A’,- materials and live animals Not Applicable (a) under FORM 21,- 253 9002 Retail trade of food, beverages and (A) with respect to the portion occurring in the square tobacco [includes fruits, vegetables, brackets,- dairy products, etc.] Not Applicable 254 9003 Retail trade of textiles, clothing and (i) after figure and letter, “17A” the figures “18, footwear Not Applicable 19” shall be inserted; 255 9004 Retail trade of household appliances, (ii) after figure “186”, the figure “188” shall be articles and equipments Not Applicable inserted; 256 9005 Retail trade of miscellaneous consumer goods Not Applicable (B) in serial number 13, after item (b) and entries 257 9006 Retail trade of construction materials relating thereto, the following shall be inserted, and hardware Not Applicable namely:- 258 9007 Retail trade of chemical and “(c) SRN of Form 24AAA pharmaceutical products Not Applicable 259 9008 Retail trade of personal care products Not Applicable (b) under FORM 23, in serial number 10, after item 260 9009 Retail trade of machinery, equipment (a) and entries relating thereto, the following shall and supplies Not Applicable be inserted, namely:- 261 9010 Retail trade of solid, liquid and gaseous fuels and related products Not Applicable “(b) SRN of Form 24AAA 262 9011 Retail trade of ores, minerals, metals and articles thereof Not Applicable Renuka Kumar 263 9012 Retail trade of stones, pearls and Joint Secretary precious metals Not Applicable 264 9013 Retail trade of vehicles Not Applicable Company Law Board (Second 265 9014 Retail trade of other products not 05 Amendment) Regulations, 2012 elsewhere specified Not Applicable 266 9015 Retail sale of any product via mail order, Internet, television, radio and telephone, etc. Not Applicable [Issued by the Ministry of Corporate Affairs vide 267 9016 Retail sale of any product not in Notification No. G.S.R. 630(E) Dated 12.08.2012.] stores, stalls or markets Not Applicable NOTES: 1. The Product or Activity Group classification do not have any correlation with the industry name mentioned in the Cost In exercise of the powers conferred by sub-section (4B) and Audit Orders issued by the Central Government under section 233B of the Companies Act, 1956. sub-section (6) of section 10E of the Companies Act, 1956 2. In case of any Product or Activity Group where multiple units of measurement are in use for the products or activities covered therein, then the relevant Product or Activity Group shall be repeated against each unit of measurement (1 of 1956), the Company Law Board hereby makes the separately. following regulations further to amend the Company Law 3. Wherever same Central Excise Tariff Act (CETA) Chapter Headings have been shown against two or more Product or Activity Groups, the actual details shall be shown against the most appropriate Product or Activity Group. Board Regulations, 1991, namely:— 1. (1) These regulations may be called the Company Law B. B. Goyal Board (Second Amendment) Regulations, 2012. Adviser (Cost) (2) They shall come into force on the date of their September publication in the Official Gazette. 2012 CHARTERED SECRETARY 1160 ( GN-189 ) ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 91

From the Government

2. In Chapter II of the Company Law Board Regulations, Doing business in a very Transparent World”, India has 1991 (hereinafter referred to as the said regulations),— been ranked at a low of 132 amongst a sample of 183 (a) In regulation 14,— countries. Although, there is a seven–point improvement (i) in sub-regulation (3), the figure "188" shall be over 2010 ranking of 139. However, India continues to omitted; lag behind even the BRIC and SAARC countries on most (ii) the first proviso shall be omitted; of the parameters. (iii) in the second proviso, for the words "Provided Further" word "Provided" shall be substituted. 2. Easing of business environment mandates extensive (b) In regulation 29, in sub-regulation (4), the "proviso" examination of regulations in different areas of root shall be omitted. functioning such as financial reforms, governance 3. In Chapter III of the said regulations, the regulation 36 reforms, liberalized policy framework, process reforms, shall be omitted. etc.,. Thus there is a need to conduct an in-depth study 4. In Annexure-III of the said regulations, against serial into the entire gamut of regulatory framework and come numbers 1, 2, 3, 13 and 18, the entires under column out with a detailed roadmap for improving the climate of numbers 2, 3 and 4 respectively, shall be omitted. business in India in a time bound manner. Such an exercise needs to be undertaken for periodical The Company Law Board (Fees on improvement in the ranking, leading to a situation where 06 Application and Petitions) India gradually moves towards upward position with (Amendment) Rules, 2012 almost zero hassles. 3. Accordingly, to achieve this, it has been decided to [Published in Gazette of India, Extraordinary, Part-II, Sec. constitute a Committee to conduct this study and prepare 3(i) vide GSR No. 547(E) Dated 10.07.2012.] a detailed report within a period of six months. The Committee shall consist of following persons: In exercise of the power conferred by Section 642 read with I. Mr. M. Damodaran - Chairman sub-section (2) of Section 637 A of the Companies Act, 1956 II. Members: (1 of 1956), the Central Government hereby makes the 1. Shri Y.C Deveshwar, Chairman, ITC following rules further to amend the Company Law Board 2. Shri Ishaat Hussain, Director, Tata Sons Limited (Fees on Application and Petitions) Rules,1991, namely:- 3. Shri K.V. Kamath, Chairman, Infosys 1. (1) These rules may be called the Company Law Board 4. Shri Madhu Tandon, (Fees on Application and Petitions) (Amendment) 5. Shri Anand Mahindra, Chairman, Mahindra Group Rules, 2012. 6. Shri Kumar Mangalam Birla, Chairman, Aditya (2) They shall come into force with effect from 12th Birla Group August, 2012. 7. Chairman, SEBI or his nominee 2. In Company Law Board (Fees on Application and 8. A representative of Reserve Bank of India Petitions) Rules, 1991, in the Schedule, serial numbers 1, 9. Shri R.K. Pachauri, Vice-Chairman, TERI 2, 3, 13, 18 and the entries relating thereto shall be 10. Shri Vijai Sharma, Ex. MoEF Secretary omitted. 11. Shri Subas Pani, former Secretary, M/o Rural Renuka Kumar Development Joint Secretary 12. A representative not below the rank of Joint Secretary from M/o Power Constitution of a Committee for 13. A representative not below the rank of Joint Secretary 07 Reforming the Regulatory from M/o Petroleum Environment for doing Business in 14. A representative not below the rank of Joint Secretary from M/o Highways India. 15. A representative not below the rank of Joint Secretary from M/o Urban Development [Issued by the Ministry of Corporate Affairs vide General 16. A representative not below the rank of Joint Secretary Circular No. 26/2012 dated 23.08.2012.] from M/o Commerce & Industry 17. A representative not below the rank of Joint Secretary from M/o Economic Affairs The undersigned is directed to state as under:- 18. Shri Amitabh Choudhary, CEO, HDFC Standard Life 1. The report of The World Bank and the International 19. Shri Anil Bharadwaj, Secretary General, FISME Finance Corporation, entitled “Doing Business 2012: September ( GN -190 ) 1161 CHARTERED SECRETARY 2012 ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 92

From the Government

20. Shri P.R. Ramesh, Chairman, Deloitte India Applicability of Service Tax on The Indian Institute of Corporate Affairs (IICA) will render 09 commission payable to Non-Whole the necessary secretarial assistance and logistic support Time Directors of a company under to the Committee which shall submit its report to the Ministry of Corporate Affairs not later than six months section 309(4) of the Companies from the date of holding of its first meeting. Further, the Act, 1956 - approval of Central committee is free to hold its meeting at anywhere in India Government under section 309/310 as decided by its chairman. The Chairman of the of the Companies Act - regarding. Committee shall be free to make its own procedure for conducting the meeting of the Committee. [Issued by the Ministry of Corporate Affairs vide General 4. In carrying out its task the Committee may, Circular No. 24/2012 dated 09.08.2012.] (a) Elicit opinions about the policy action initiatives required and the changes in the statute required for The Finance Act 2012 has introduced Service Tax which is meeting the objective of conducive business applicable to anyone who provides a Service not covered environment. under the negative/exempted list and if the value of annual (b) Hold wide consultations with all the stakeholders in revenue is more than Rs. 10 lakh. The Non-Whole Time the corporate sector, academics and members of Directors of the Company are presently not covered under public; the exempted list and as such, the sitting feel commission (c) Issue questionnaires and invite written comments payable to them by the company is liable to Service Tax. through public advertisements; and (d) Take such other steps as may be considered If such Service Tax is paid by the company, it will be deemed necessary to suggest a comprehensive policy to be a part of remuneration under section 198 of the Act and framework to enable regulatory environment for would accordingly increase the remuneration amount of such doing business in India. Non-Whole Time Directors. This remuneration could then This issues with the approval of Hon’ble Corporate exceed the limit of 1% profit [u/s 309(4)] of the company when Affair Minister. the company has a Managing/Whole Time Directors/ Managers or 3% of the profit [u/s 309(4)] of the company if the Sanjay Shorey company does not have a Managing/Whole Time Directors/ Joint Director Managers, as the case may be. As per existing provisions of the Companies Act, 1956, this would require prior approval of Clarification on Para 46A of Central Government u/s 309 and 310 of the Act. 08 notification number G.S.R. 914(E) It has now been decided that any increase in remuneration dated 29.12.2011 on Accounting of Non-Whole Time Director(s) of a company solely on Standard 11 relating to "The account of payment of service tax on commission payable to them by the company shall not require approval of Central effects of Changes in Foreign Government under section 309 and 310 of the Companies Exchange Rates". Act even if it exceeds the limit 1% or 3% of the profit [u/s 309(4)] of the company, as the case may be, in the financial [Issued by the Ministry of Corporate Affairs vide General year 2012-13. Circular No. 25/2012 dated 09.08.2012.] L. K. Trivedi Under Secretary The Ministry has received several representations from Company Law Settlement Scheme, industry associations that Para 6 of Accounting Standard-11 10 (Jammu & Kashmir) 2012 and Para 4(e) of AS-16 are posing problems in proper implementation of Para 46A of notification 914(E) dated 29.12.2011. In order to resolve the problems faced by [Issued by the Ministry of Corporate Affairs vide General industry, it is hereby clarified that Para 6 of Accounting Circular No. 23/2012 dated 06.08.2012.] Standard-11 and Para 4(e) of the Accounting Standard-16 shall not apply to a company which is applying clause 46-A 1. It has been observed that a large number of companies of Accounting Standard-11. are not filing their due statutory documents (i.e. Balance J. N. Tikku Sheets and Annual Returns) timely with the Registrar of Joint Director Companies. Due to this, the records available in the September electronic registry are not updated and thereby are not 2012 CHARTERED SECRETARY 1162 ( GN-191 ) ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 93

From the Government

available to the stakeholders for inspection. Further, due on filing belated document for seeking to non filing the documents on time, companies are imunity under the Scheme - The defaulting burdened with additional fee, facing the prosecutions and company shall pay statutory filing fees as being debarred from filing other documents electronically prescribed under the Companies Act and rules as provided in General Circular No. 33/2011 dated made there under along with an additional fee of 01.06.2011 read with 63/2011 dated 06/03/2011 & 25 percent of the actual additional fee 9/2012 dated 15/05/2012. Also, it has been further standardised under subsection(2) of Section 611 observed that non compliance of the filing of Balance of the Companies Act, 1956, payable on the date Sheets and Annual Returns is even more critical in the of filing of each belated document; state of Jammu & Kashmir. 2. In order to give an opportunity to the defaulting (v) Withdrawal of appeal against prosecution companies in the state of Jammu & Kashmir to enable launched for the offences- If the defaulting them to make their default good by filing such belated company has filed any appeal against any notice documents and to become a regular compliant in future, issued or complaint filed before the competent the Ministry, in exercise of the powers under Section court for violation of the provisions under the Act 611(2) and 637B(b) of the Companies Act, 1956 has in respect of which application is made under this decided to introduce a Special Scheme namely, Scheme, the applicant shall before filing an “Company Law Settlement Scheme (Jammu & Kashmir), application for issue of immunity certificate, 2012” condoning the delay in filing documents with the withdraw the appeal and furnish the proof of such Registrar, granting immunity from prosecution and withdrawal along with the application; charging additional fee of 25 percent of actual additional fee payable for filing belated documents under the (vi) Application for issue of immunity in respect of Companies Act, 1956 and the rules made there under. document(s) filed under the scheme - The The details of the Scheme are as under:- application for seeking immunity in respect of (i) The scheme shall come into force on the 15.08.2012 belated documents filed under the Scheme may and shall remain in force up to 14.12.2012. be made electronically in the Form annexed to the (ii) Definitions - In this Scheme, unless the context concerned Registrar of Companies, after closure otherwise requires, - of Scheme and after the document(s) are taken (a) "Act" means the Companies Act, 1956 (1 of on file, or on record or approved by the 1956); designated authority as the case may be, but not (b) "Company" means a company registered in the after the expiry of six months from the date of state of Jammu and Kashmir under the closure of the Scheme. There shall not be any fee Companies Act, 1956 and a foreign company payable on this Form; falling under section 591 of the Act having their liaison office in the state of Jammu & Kashmir; (vii)Order by designated authority granting (c) "defaulting company” means a company as immunity from the penalty and prosecution - defined above, which has made a default in filing The designated authority shall consider the of documents on the due date(s) specified under application and upon being satisfied shall grant the Companies Act, 1956 and rules made there the immunity certificate in respect of documents under; filed in the Scheme. In case, company has shifted (d) "designated authority" means the Registrar of its registered office from Jammu & Kashmir to any Companies (Jammu & Kashmir) having other State subsequent to its filing of belated jurisdiction over the registered office of the documents under the Scheme, the concerned company registered in the state of Jammu and Registrar of Companies shall consider the Kashmir and Registrar of Companies (Delhi) for application and upon being satisfied shall grant foreign companies falling under section 591 of the such immunity certificate; Act having their liaison office in the state of Jammu & Kashmir. (viii)Scheme not to apply to certain documents – (iii) Applicability: - Any “defaulting company” is (a) This Scheme shall not apply to the filing of permitted to file belated documents, which were documents other that following documents:- due for filing till 30.06.2012, in accordance with the provisions of this Scheme: Form 20 B – Form of filing annual return by a company having a share capital (iv) Manner of payment of fees and additional fee September ( GN -192 ) 1163 CHARTERED SECRETARY 2012 ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 94

From the Government

Form 21A – Particulars of annual return (c) "e-mail iD of the company for the company not having share capital (d) Date of incorporation of Indian company (DD/MM/YYYY) or date of establishment of the principal place of business in India of foreign company Form 23AC & 23ACA – Form for filing Balance Sheet and Profit & Loss account 3. Details of documents filed under the Company law Settlement Scheme, (Jammu & Kashmir ) 2012 Form 23AC-XBRL & 23ACA-XBRL – Form Pre-fill for filing XBRL Balance Sheet and Profit & Total number of Service Request Number (SRN)(s) Loss account SRN Form number(s) Date of filing Date of event Statutory Actual Additoi nal fee Total fees (DDIMMiYYYY) (DOIMfNYYYY) filing fees additional charged under paid Form 23B – Information by auditor to the (in Rs.) fees CLSS, (JK) (in Rs.) Registrar (in Rs.) 2012 (in Rs.) Form 52 – Filing of annual accounts by a foreign company

Form 66 – Form for submission of Compliance Certificate with the Registrar (b) This Scheme shall not apply to companies

against which action under sub-section (5) of Total (in Rs.) section 560 of the Act has been initiated by 4. *Whether any appeal(s) was filed against any notice issued or complaint filed the Registrar of Companies; before the competent court for violatoin of the provisions under the Act in (ix) After granting the immunity, the concerned respect of the above mentioned document(s).If yes, attach proof of Registrar of Companies shall withdraw the withdrawal of such appeal Yes No Not Applicable prosecution(s) pending, if any, before the 5. *Whether any prosecution(s)is pending in court against the company and its concerned Court(s); officers in respect of belated documents filed under the scheme. If yes, provide details there of as an attachment. Yes No 3. At the conclusion of the Scheme, the designated 6. *Whether any director(s) of the company is declared as proclaimed offender or facing criminal case(s) for economic offences. If yes, provide details of authority shall take necessary action under the such director(s) as an attachment Yes No Companies Act, 1956 against the companies who have not availed this Scheme and are in default in filing of Attachments Attach List of attachments documents in a timely manner. 1 Proof of withdrawal of any appeal(s) against any notice issued or Sanjay Shorey complaint filed before the Joint Director competent court 2 Details in respect of prosecution(s) Attach FORM pending against the company and [Pursuant to Company Law Settlement Application for issue of immunity certificate its officers in respect of belated Scheme, (Jammu & Kashmir) 2012) under the Company Law Settlement Scheme, documents filed under the scheme (Jammu & Kashmir) 2012 which requires withdrawal by the Note -All fields marked in* are to be mandatorily filled. Registrar To 3 Details of director(s) declared as The Registrar of Companies, proclaimed offender or facing criminal Attach case(s) for economic offences Sir/ Madam, 4 . Optional attachment(s) - if any Attach Remove Attachment I herewith make an application for issue of immunity certificate under the Company Verification Law Settlement Scheme, (Jammu & Kashmir) 2012 and give below the following To the best of my knowledge and belief, the information given in this particulars, namely:- application and its attachments is correct and complete. 1.(a) *Corporate identity number (CIN) or foreign Pre-fill I have been authorised by the Board of directors’ resolution company registration number (FCRN) of the number dated (DD/MM/YYYY) company to sign and submit this application. (b) Global location number (GLN) of company I am authorised by the Board of directors to sign and submit this 2. (a) Name of the company application. * The company had failed to comply with the provisions of the Act as mentioned in respect of filing of above mentioned documents. (b) Address of the registered The company has withdrawn the appeals pending before any Court or office or of the principal Company Law Boord or Regional Director or any other adjudicating place of business in India authority. of the company To be digitally signed by Managing Directcr or director or manager or secretary of the September company (in case of an Indian company) or authorised representative (in case of a foreign company ) 2012 CHARTERED SECRETARY 1164 ( GN-193 ) ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 95

From the Government

*Designation Imposing fees on certain e-forms *Director identification number of the director or 13 filed with ROC, RD or MCA(HQ) Managing Director; or Income-tax permanent under MCA-21 where at present no account number ( Income-tax PAN) of the manager or authorised representative; or fee is prescribed Membership number, if applicable or income-tax PAN of the secretary (secretary of a company who is not a [Issued by the Ministry of Corporate Affairs vide General member of ICSI, may quote his/her income-tax PAN) Circular No. 19/2012 dated 27.07.2012.]

Modify Check Form Pre Scrutiny Submit I am directed to refer to the Ministry’s General Circular no. For office use only : Affix filing details 14/2012 dated 21st June 2012 and to say that fees on Form eForm Service request number (SRN) eForm filing date (DD/MM/YYYY) 23B (Information by statutory auditor to the Registrar) has been deferred for two weeks and shall now be applicable Digital signature of the authorising officer from 5th August, 2012.

This e-Form is hereby approved Confirm Submission Sanjay Shorey This e-Form is hereby rejected Joint Director Date of signing (DD/MM/YYYY) Redemption of Indian Depository 14 Receipts (IDRs) into Underlying Imposing fees on certain e-forms Equity Shares 11 filed with ROC, RD or MCA(HQ) under MCA-21 where at present no [Issued by the Securities and Exchange Board of India vide fee is prescribed CIR/CFD/DIL/10/2012 dated 28.08.2012.] [Issued by the Ministry of Corporate Affairs vide General 1. SEBI, vide circular No: CIR/CFD/DIL/3/2011 dated June Circular No. 22/2012 dated 03.08.2012.] 03, 2011, has prescribed the framework for redemption of IDRs into underlying equity shares. The circular has, I am directed to refer to the Ministry's General Circular no. inter-alia, stated that after the completion of one year 14/2012 dated 21st June 2012 & General Circular no. from the date of issuance of IDRs, redemption of the 19/2012 dated 27th July 2012 and to say that fees on Form IDRs shall be permitted only if the IDRs are infrequently 23B (Information by statutory auditor to the Registrar) has traded on the stock exchange(s) in India. been further deferred for one week and shall now be 2. The Hon’ble Finance Minister in his Budget speech on applicable from12th August, 2012. March 16, 2012, has proposed, inter alia, that two-way fungibility of IDRs be permitted subject to a ceiling, with Sanjay Shorey the objective of encouraging greater foreign participation Joint Director in Indian capital market. Filling of Balance Sheet and Profit 3. For implementation of the said budget proposal and to 12 and Loss Account by companies in improve the attractiveness of IDRs as an instrument NonXBRL for accounting year thereby ensuring long term sustainability of IDRs, it is decided to prescribe a framework for two-way fungibility commencing on or after 1.04.2011 of IDRs. [Issued by the Ministry of Corporate Affairs vide General 4. However, to retain the domestic liquidity, it is decided to Circular No. 21/2012 dated 02.08.2012.] allow partial fungibility of IDRs (i.e. redemption/conversion of IDRs into underlying equity Notification no. S.O-447 (E) dated 28.02.2011 on revised shares) in a financial year to the extent of 25 % of the schedule VI is effective from 1st April 2011. The current year IDRs originally issued. Suitable instructions for modifying filing based on revised schedule VI is due for filing. The the existing legal framework governing IDRs, in order to revised form 23AC & ACA is under finalization and will be implement the decision to allow redemption of IDRs into notified shortly on the MCA website. underlying equity shares and re-conversion of equity All companies who are required to file non XBRL eform 23 shares of a foreign issuer (which has already listed their AC & ACA as per revised schedule VI be allowed to file their IDRs) into IDRs, will be issued separately. financial statement without any additional fee/penalty upto 5. As and when the instructions for modifying the existing 15th September 2012 or with in 30 days from the date of their legal framework referred to at para 4 above are issued, AGM, which ever is later. Sanjay Kumar Gupta Deputy Director September ( GN -194 ) 1165 CHARTERED SECRETARY 2012 ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 96

From the Government

this circular shall be effective and SEBI circular No: i. No Annual Maintenance Charges (AMC) shall be CIR/CFD/DIL/3/2011 dated June 03, 2011 would stand levied, if the value of holding is upto Rs. 50,000. rescinded. ii. For the value of holding from Rs 50,001 to Rs 6. This circular is issued in exercise of the powers conferred 200,000, AMC not exceeding Rs 100 may be under Section 11 read with Section 11A of the Securities charged. and Exchange Board of India Act, 1992. b. The value of holding shall be determined by the DPs 7. This circular is available on SEBI website at on the basis of the daily closing price or NAV of the www.sebi.gov.in under the categories securities or units of mutual funds, as the case may “Legal Framework” and “Issues and Listing”. be. Where such price is not available the last traded price may be taken into account and for unlisted Sunil Kadam securities other than units of mutual funds, face value General Manager may be taken in to account. Facility for a Basic Services Demat c. If the value of holding in such BSDA exceeds the 15 Account (BSDA) prescribed criteria at any date, the DPs may levy charges as applicable to regular accounts (non- BSDA) from that date onwards. [Issued by the Securities and Exchange Board of India vide d. The DPs shall reassess the eligibility of the BOs at the CIR/MRD/DP/22/2012 dated 27.08.2012.] end of every billing cycle and give option to the BOs who are eligible to opt for BSDA. 1. The SEBI Board had taken decisions to extend the reach 5. Services for Basic Services Demat Accounts: of IPOs for the benefit of retail investors. With a view to a. Transaction statements: achieve wider financial inclusion, encourage holding of i. Transaction statements shall be sent to the BO at demat accounts and to reduce the cost of maintaining the end of each quarter. If there are no securities in demat accounts for retail individual transactions in any quarter, no transaction investors, it has been decided that all depository statement may be sent for that quarter. participants (DPs) shall make available a "Basic Services ii. If there are no transactions and no security Demat Account" (BSDA) with limited services as per balance in an account, then no further transaction terms specified herein. statement needs to be provided. 2. Eligibility: Individuals shall be eligible to opt for BSDA iii. Transaction statement shall be required to be subject to the following conditions. provided for the quarter in which the account a. All the individuals who have or propose to have only became a zero balance account. one demat account where they are the sole or first b. Holding Statement: holder. i. One annual physical statement of holding shall be b. Individuals having any other demat account/s where sent to the stated address of the BO in respect of they are not the first holder shall be eligible for BSDA accounts with no transaction and nil balance. in respect of the single demat account where they are ii. One annual statement of holding shall be sent in sole or first holder. respect of remaining accounts in physical or c. The individual shall have only one BSDA in his/her electronic form as opted for by the BO. name across all depositories. c. Charges for statements: Electronic statements shall d. Value of securities held in the demat account shall not be provided free of cost. In case of physical exceed Rupees Two Lakhs at any point of time. statements, the DP shall provide at least two 3. Option to open BSDA: The DP shall give option: statements free of cost during the billing cycle. a. To open BSDA to all eligible individuals who open a Additional physical statement may be charged at a fee demat account after the date of applicability of this not exceeding Rs.25/- per statement. circular; d. All BOs opting for the facility of BSDA, shall register b. To all the existing eligible individuals to convert their their mobile number for availing the SMS alert facility demat account into BSDA on the date of the next for debit transactions. billing cycle based on value of holding of securities in e. At least Two Delivery Instruction Slips (DIS) shall be the account as on the last day of previous billing cycle. issued at the time of account opening. 4. Charges: f. All other conditions as applicable to regular demat a. The charge structure may be on a slab basis as accounts, other than the ones mentioned in this indicated below: circular shall continue to apply to basic services demat account. September 6. Rationalisation of services with respect to regular 2012 CHARTERED SECRETARY 1166 ( GN-195 ) ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 97

From the Government

accounts. investors, in consultation with the major stock exchanges In partial modification of the earlier directions, the and stock brokers’ associations, it has been decided to following rationalisation measures shall be available for rationalize the procedure for surrender of sub-broker regular demat accounts: registration, as follows. a. Accounts with zero balance and nil transactions (i) The affiliating stock broker shall issue a public during the year: The DPs shall send one physical advertisement in a local newspaper with wide statement of holding annually to such BOs and shall circulation where the sub-broker’s place of work is resume sending the transaction statement as and situated, informing the investors/general public about when there is a transaction in the account. the surrender of registration of his sub-broker and not b. Accounts which become zero balance during the to deal with such sub-broker. year: For such accounts, no transaction statement (ii) Further, in case of transition from sub broker to may be sent for the duration when the balance Authorized Person (AP) (where the sub broker remains nil. However, an annual statement of holding surrenders registration while seeking approval as AP) shall be sent to the BO. with the same stock broker and the same stock c. Accounts with credit balance: For accounts with exchange, issue of advertisement in newspaper credit balance but no transactions during the year, regarding surrender of sub broker registration shall one statement of holding for the year shall be sent to not be required. However, the affiliating stock broker the BO. shall furnish an undertaking/ confirmation to the stock 7. The circular shall be applicable with effect from October exchanges at the time of surrender of sub broker 01, 2012. registration that he has sent communication to the 8. The Depositories are advised to:- clients of the sub broker individually about the a) make amendments to the relevant bye-laws, rules and surrender of sub brokership and also the fact of regulations for the implementation of the above approval as AP. decision immediately, as may be (iii)The affiliating stock broker and/or stock exchange applicable/necessary ; shall publish the details of sub-brokers whose b) bring the provisions of this circular to the notice of registration has been surrendered or their new status their DPs and also to disseminate the same on their as AP, as the case may be on their respective website; and websites for the information of the investors. c) communicate to SEBI, the status of implementation of 3. The aforesaid SEBI circular shall stand modified to the the provisions of this circular in the Monthly extent of the above changes. Development Report. 4. This circular is issued in exercise of powers conferred under Section 11(1) of the Securities and Exchange 9. This circular is being issued in exercise of the powers Board of India Act, 1992, to protect the interests of conferred by Section 11 (1) of Securities and Exchange investors in securities and to promote the development Board of India Act, 1992 and section 19 of the of, and to regulate the securities market. Depositories Act, 1996 to protect the interest of investors 5. The circular is available on SEBI website in securities and to promote the development of, and to (www.sebi.gov.in) under the categories regulate, the securities market. “Legal Framework” and “Circulars”. Maninder Cheema Deputy General Manager Ruchi Chojer Deputy General Manager Rationalization of process relating to 16 surrender of registration by sub- The Securities and Exchange Board brokers 17 of India (Issue of Capital and Disclosure Requirements) (Third [Issued by the Securities and Exchange Board of India vide Amendment) Regulations, 2012 CIR/MIRSD/10/2012 dated 27.08.2012.] [Published in the Gazette of India, Extraordinary Part-III, 1. Please refer to SEBI Circular MIRSD-DR1/SRP/Cir- Section 4 vide Notification No. LAD-NRO/GN/2012- 43/28408/04 dated December 15, 2004 regarding, inter- 13/12/18951 dated 24.08.2012.] alia, surrender of certificate of registration of sub-brokers. 2. Considering the present role of sub-broker where he is In exercise of the powers conferred by section 30 of the not permitted to deal with funds and securities of the September ( GN -196 ) 1167 CHARTERED SECRETARY 2012 ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 98

From the Government

Securities and Exchange Board of India Act, 1992 (15 of placement programme or offer for sale through stock 1992), the Board hereby makes the following Regulations to exchange mechanism specified by the Board, subject further amend the Securities and Exchange Board of India to the condition that there shall be a gap of minimum (Issue of Capital and Disclosure Requirements) Regulations, two weeks between the two successive offer(s) and 2009, namely:– /or programme(s). " U.K. SINHA 1. These Regulations may be called the Securities and Chairman Exchange Board of India (Issue of Capital and Disclosure Requirements) (Third Amendment) Regulations, 2012. Filing Offer Documents under SEBI (Issue of Capital and Disclosure 2. They shall come into force on the date of their publication 18 in the Official Gazette. Requirements)Regulations, 2009

3. In the Securities and Exchange Board of India (Issue of [Issued by the Securities and Exchange Board of India vide Capital and Disclosure Requirements) Regulations, CIR/CFD/DIL/9/2012 dated 22.08.2012.] 2009– (i) in regulation 14, - 1. Please refer to circular No. SEBI CIR/CFD/DIL/5/2012 (1) in sub-regulation (1), for the full stop, the symbol ":" dated May 03, 2012 on the captioned subject. shall be substituted; (2) after sub-regulation (1), the following proviso shall 2. In partial modification of the above referred circular, it is be inserted, namely,- hereby informed that the jurisdiction of Eastern Regional "Provided that in the case of an initial public Office of SEBI includes the state of Sikkim and the Union offer, the minimum subscription to be received Territory of Andaman & Nicobar Islands. The revised shall be subject to allotment of minimum Jurisdiction of Eastern Region is as indicated below:- number of specified securities, as prescribed in sub-clause (b) of clause (2) of rule 19 of Sl. Region in Jurisdictions covered Name and address Securities Contracts (Regulation) Rules, 1957." ; No. which in this region of the office of the (3) sub-regulation (4) shall be substituted with the registered Board where draft following, namely- office of the offer document / "Nothing contained in this regulation, except issuer falls offer document is the requirement relating to allotment of required to be filed minimum number of specified securities, shall Estimated issue size of upto ` 500 crore apply to offer for sale of specified securities." (ii) in regulation 41, - i. Eastern Assam, Bihar, SEBI Eastern (1) in sub-regulation (1), the symbol and number "(1)" Region Manipur, Meghalaya, Regional shall be omitted; Nagaland, Orissa, Office, 3rd Floor, (2) sub-regulation (2) shall be omitted; West Bengal, Tripura, (3) explanation shall be omitted. Arunachal Pradesh, L & T Chambers, (iii)in regulation 91G, sub-regulation (1) shall be Mizoram, Jharkhand, 16 Camac Street, substituted with the following, namely,- Andaman & Nicobar Kolkata - 700 017 "(1) The promoter or promoter group shall not make Islands and Sikkim institutional placement programme if the promoter or 3. The amendments made vide this circular shall come into any person who is part of the promoter group has effect for all draft offer documents for issues which are purchased or sold the eligible securities during the filed with SEBI on or after August 27, 2012. twelve weeks period prior to the date of the programme and they shall not purchase or sell the 4. The above are specified in exercise of the powers eligible securities during the twelve weeks period after conferred under Section 11 read with Section 11A of the the date of the programme: Securities and Exchange Board of India Act, 1992. This circular is available on SEBI website at www.sebi.gov.in Provided that such promoter or promoter group may , under the categories “Legal Framework” and “Issues and within the period provided in sub-regulation (1), offer Listing”. eligible securities held by them through institutional Harini Balaji September Deputy General Manager 2012 CHARTERED SECRETARY 1168 ( GN-197 ) ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 99

From the Government

Notification regarding Establishment 3, 2011 regarding commencement of SEBI Complaints 19 of Local Office of the Board at Redress System (SCORES) and advising all companies whose securities are listed on various stock exchanges to Bengaluru comply with the provisions of the said circular. 1. In this regard, all companies whose securities are listed [Issued by the Securities and Exchange Board of India vide on stock exchanges, are hereby advised to obtain Notification No. LAD-NRO/GN/2012-13/10/18461 dated SCORES authentication by September 14, 2012 in terms 17.08.2012.] of the aforesaid circular. 2. All companies against whom complaints are pending on In exercise of the powers conferred by sub-section (4) of SCORES, shall take appropriate necessary steps within section 3 of the Securities and Exchange Board of India Act, 7 days of receipt of complaint by the concerned company 1992 (15 of 1992), the Board has established its Local Office through SCORES, so as to resolve the complaint within at Bengaluru under the administrative control of its Southern 30 days of receipt of complaint and also keep the Regional Office at Chennai. The Local Office so established complainant duly informed of the action taken thereon. shall look after the regulatory aspects of investor protection, 3. In case of failure to comply with the above, SEBI would investor education and such other functions as may be be constrained to initiate enforcement actions as per the delegated from time to time, and its role and responsibility law as may be deemed appropriate. shall extend to the areas falling under the territorial 4. The Stock Exchanges are accordingly advised to bring jurisdiction of the State of Karnataka. the provisions of this Circular to the notice of all the companies whose securities are listed in the exchange U.K. SINHA and also to disseminate the same on the website. Chairman 5. This Circular is issued in exercise of powers conferred Notification regarding Establishment under Section 11(1) of the Securities and Exchange Board of India Act, 1992 to protect the interests of of Local Office of the Board at Jaipur investors in securities and to promote the development 20 of, and to regulate the securities market. [Issued by the Securities and Exchange Board of 6. This Circular is available on SEBI website at India vide Notification No. LAD-NRO/GN/2012-13/08/0308 www.sebi.gov.in. dated 03.08.2012.] Gyan Bhushan Chief General Manager In exercise of the powers conferred by sub-section (4) of section 3 of the Securities and Exchange Board of India Act, Manner of Dealing with Audit 1992 (15 of 1992), the Board has established its Local Office 22 Reports filed by Listed companies at Jaipur under the administrative control of its Western Regional Office at Ahmedabad. The Local Office so established shall look after the regulatory aspects of investor [Issued by the Securities and Exchange Board of India vide protection, investor education and such other functions as CIR/CFD/DIL/7/2012 dated 13.08.2012.] may be delegated from time to time, and its role and responsibility shall extend to the areas falling under the 1. Clause 31(a) of Equity Listing Agreement, inter-alia, territorial jurisdiction of the State of Rajasthan. requires listed companies to submit six copies of annual reports containing audited annual financial statements to U. K. Sinha the stock exchanges. Chairman 2. SEBI, in its continuous endeavor to enhance the quality of financial reporting being done by listed companies, has Redressal of investor grievances now decided to put in place a system to monitor the audit 21 against listed companies in SEBI qualifications contained in the audit report accompanying the audited annual financial statements submitted by Complaints Redress System listed companies. The exact text of amendments to (SCORES). Equity Listing Agreement in this regard is given in the Annexure to this circular. [Issued by the Securities and Exchange Board of India vide 3. Accordingly, listed companies shall now be required to CIR/OIAE/1/2012 dated 13.08.2012.] submit the following forms, as may be applicable, along

SEBI had issued Circular No.CIR/OIAE/2/2011 dated June September ( GN -198 ) 1169 CHARTERED SECRETARY 2012 ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 100

From the Government

with copies of annual reports submitted to stock given by the listed company concerned / its Audit exchanges: Committee is unsatisfactory, the case may be l Form A: Unqualified/ Matter of Emphasis Report referred to the Financial Reporting Review Board l Form B: Qualified/ Subject To/ Except For Audit of ICAI (ICAI-FRRB) for their opinion on whether Report the qualification is justified or requires restatement 4. The format of Form A and Form B is given in the of the books of accounts of the listed company; Annexure to this circular as part of the amendments to (iii)If an audit qualification is not quantifiable, QARC Equity Listing Agreement. These forms shall be signed may suggest rectification of the same within a by the a) Chief Executive Officer / Managing Director, b) stipulated period. Chief Financial Officer, c) Auditor and d) Chairman of the (e) If ICAI-FRRB opines that an audit qualification is Audit Committee. The information submitted as per these justified, SEBI may ask the listed company concerned forms shall also draw attention to relevant notes in the to restate its books of accounts in compliance with the annual financial statements, management's response to statutory requirements and inform its shareholders qualifications in the Directors report and comments of the about the same by making an announcement to the Board/ Chair of the Audit Committee. stock exchanges. 5. Stock exchanges shall adopt the following procedure to SEBI may also direct the listed company concerned to process the audit reports accompanying audited annual reflect the effect of these restatement adjustments in financial statements submitted by listed companies along the annual report of the subsequent financial year. with Form B: (f) If ICAI-FRRB is of the view that an audit qualification (a) Stock exchanges shall carry out preliminary scrutiny is not justified, ICAI may ask the statutory auditor of of reports accompanied by Form B including seeking the listed company concerned to provide necessary necessary explanation from the listed company clarifications and may take appropriate action. concerned and consider the same based on (g) The scrutiny of all audit reports filed as per Form B materiality of the qualifications. The parameters for shall be carried out twice a year based on the reports ascertaining the materiality of audit qualifications shall received up to half year ending on June and be, the impact of these qualifications on the profit and December of every year and for this purpose, the loss, financial position and corporate governance of following timelines are prescribed: the listed company. For the purpose of uniformity, stock exchanges shall consult one other for deciding Activity To be completed by the criteria for preliminary scrutiny. Further, stock exchanges shall also consult one other for distributing Filing of annual audit reports As per the provisions of the work in case shares of the listed company by the listed companies the Listing Agreement concerned are listed on more than one stock Preliminary scrutiny of the One month from the end exchange. reports received during the of half year ending on (b) Upon examining the audit reports based on the above half year (Jan - Jun and June and December parameters, stock exchanges shall refer those cases, Jul -Dec each year) by each year. which, in their opinion, need further examination, to stock exchanges and referring SEBI. applicable cases to SEBI (c) SEBI has constituted the ‘Qualified Audit Review Review of the cases by One month from the date Committee’ (QARC) with representatives from QARC of receipt of report from the Institute of Chartered Accountants of India (ICAI), Stock Exchanges. stock exchanges, etc. The QARC shall review the cases received from the stock exchanges and guide Referring applicable cases Fifteen days from the date to ICAI-FRRB of decision of the QARC SEBI in processing the qualified annual audit reports referred to by the stock exchanges. Receipt of reply from One month from the date (d) After analyzing the qualifications in audit reports, ICAI-FRRB of referral by QARC QARC may make following recommendations: (i) If, prima facie, QARC is of the view that an audit Communication of decision Fifteen days from the date qualification is not significant, it may suggest steps on the case to the listed of receipt of reply from company concerned and ICAI-FRRB for rectification of such qualification; the stock exchanges. (ii) If, prima facie, QARC is of the view that an audit This also includes reports qualification is significant and the explanation received directly from ICAI-FRRB with a recommendation of September restatement. 2012 CHARTERED SECRETARY 1170 ( GN-199 ) ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 101

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Publication of restated Within two months from 4. Frequency of qualification Whether appeared first time ..../ financial results by the the date of letter of repetitive ..../ since how long listed company concerned. communication to the period ...... concerned entity. 5. Draw attention to relevant notes May give gist of qualifications in the annual financial /headings (Refer page numbers (h) SEBI may, at any stage, in the interest of investors, statements and management in the annual report) and take necessary action as it deems fit, including response to the qualification management’s response mandating restatement of books of accounts. in the directors report: (i) Stock exchanges shall display the list of companies 6. Additional comments from the This may relate to nature of the which have filed their audit reports along with Form B. board/audit committee chair: qualification including materiality, agreement/disagreement on the 6. This circular is issued in exercise of the powers conferred qualification, steps taken to under Section 11 read with Section 11A of the Securities resolve the qualification, etc. and Exchange Board of India Act, 1992. 7. To be signed by- 7. All stock exchanges are advised to ensure compliance l CEO/Managing Director with this circular. This circular is applicable to all annual l CFO audited financial results submitted for the period ending l Auditor of the company on or after December 31, 2012. l Audit Committee Chairman" 8. This circular is available on SEBI website at 2. After Clause 31, a new Clause 31A shall be inserted, viz., www.sebi.gov.in under the categories “Legal Framework” :- "31A. The issuer agrees to restate its books of and “Issues and Listing”. accounts on the directions issued by SEBI or by any other statutory authority, as per the provisions of the Sunil Kadam extant regulatory framework". General Manager ANNEXURE Aadhaar Letter as Proof of Address Amendments to Equity Listing Agreement 23 for Know Your Client (KYC) norms. 1. In Clause 31 of Equity Listing Agreement, in sub-clause [Issued by the Securities and Exchange Board of India vide (a), after the term ".....Directors' Annual Reports", the CIR/MIRSD/09/2012 dated 13.08.2012.] following shall be inserted, viz.,:- "along with Form A or Form B, as applicable, the 1. Please refer to SEBI circular no. CIR/MIRSD/16/2011 proforma for which shall be as under:- dated August 22, 2011, MIRSD/SE/Cir-21/2011 dated October 5, 2011, on uniform KYC requirements and the FORM A list of documents admissible as Proof of Address. Format of covering letter of the annual audit report to be filed with the stock exchanges 2. In consultation with Unique Identification Authority of 1. Name of the Company: XYZ Ltd. India (UIDAI), Government of India, it has now been 2. Annual financial statements 31st March... decided that the Aadhaar Letter issued by UIDAI shall be for the year ended admissible as Proof of Address in addition to its presently 3. Type of Audit observation Un-qualified / Matter of Emphasis being recognized as Proof of Identity. 4. Frequency of observation Whether appeared first time ... / repetitive ... / since how long 3. In partial modification, in point 9. d of SEBI Circular No. period .... CIR/MIRSD/16/2011 dated August 22, 2011, the date 5. To be signed by- l CEO/Managing Director shall be read as ‘January 31, 2000’ instead of. ‘January l CFO 3, 2000’ and in point 4 of SEBI Circular No. MIRSD/Cir- l Auditor of the company 26/2011 dated December 23, 2011, the date shall be l Audit Committee Chairman read as ‘February 1, 2012’ instead of ‘February 1, 2011’.

4. This circular is issued in exercise of powers conferred FORM B under Section 11(1) of the Securities and Exchange Format of covering letter of the annual audit report to be filed Board of India Act, 1992 to protect the interests of with the stock exchanges investors in securities and to promote the development 1. Name of the Company: XYZ Ltd of, and to regulate the securities markets. 2. Annual financial statements for 31st March ...... A. S. Mithwani the year ended Deputy General Manager 3. Type of Audit qualification Qualified..../ Subject to ..../ Except for.... September ( GN -200 ) 1171 CHARTERED SECRETARY 2012 ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 102

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Business Responsibility the circular would be applicable based on the said 24 Reports criteria and disseminate the same in their websites respectively. Other listed entities may voluntarily [Issued by the Securities and Exchange Board of India vide disclose BR Reports as part of their Annual Reports. CIR/CFD/DIL/8/2012 dated 13.08.2012.] Those listed entities which have been submitting sustainability reports to overseas regulatory 1. At a time and age when enterprises are increasingly seen agencies/stakeholders based on internationally as critical components of the social system, they are accepted reporting frameworks need not prepare a accountable not merely to their shareholders from a separate report for the purpose of these guidelines but revenue and profitability perspective but also to the larger only furnish the same to their stakeholders along with society which is also its stakeholder. Hence, adoption of the details of the framework under which their BR responsible business practices in the interest of the social Report has been prepared and a mapping of the set-up and the environment are as vital as their financial principles contained in these guidelines to the and operational performance. This is all the more relevant disclosures made in their sustainability reports. for listed entities which, considering the fact that they have b. The provisions of this circular shall be applicable with accessed funds from the public, have an element of public effect from financial year ending on or after December interest involved, and are obligated to make exhaustive 31, 2012. However, listed entities who are yet to continuous disclosures on a regular basis. submit their Annual Reports for financial year ended on March 31, 2012 may also include BR Reports as 2. Ministry of Corporate Affairs, Government of India, in July part of their Annual Reports on a voluntary basis 2011, came out with the 'National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of 6. The above listing conditions are specified in exercise Business'. These guidelines contain comprehensive of the powers conferred under Section 11 read with principles to be adopted by companies as part of their Section 11A of the Securities and Exchange Board of business practices and a structured business India Act, 1992. The said listing conditions should form responsibility reporting format requiring certain specified part of the existing Listing Agreement of the stock disclosures, demonstrating the steps taken by companies exchange. to implement the said principles. 7. All stock exchanges are advised to ensure compliance 3. In line with the above Guidelines and considering the with this circular and carry out the amendments in their larger interest of public disclosure regarding steps taken Listing Agreement as per the Annexure to this circular. by listed entities from a Environmental, Social and Governance (“ESG”) perspective, it has been decided to 8. This circular is available on SEBI website at mandate inclusion of Business Responsibility Reports www.sebi.gov.in under the categories “Legal Framework” (“BR reports”) as part of the Annual Reports for listed and “Issues and Listing”. entities. Therefore, in line with the objective to enhance the quality of disclosures made by listed entities, certain Sunil Kadam General Manager listing conditions are hereby specified by way of inserting Clause 55 in the equity Listing Agreement as given in Annexure-1 Annexure-1. Amendments to Listing Agreement 4. Certain key principles to assess the fulfillment of listed 1. A new Clause 55 shall be inserted to read as under, viz., entities and a description of the core elements under these ‘Listed entities shall submit, as part of their Annual principles are detailed at Annexure-2. Reports, Business Responsibility Reports, describing the initiatives taken by them from an environmental, social 5. Applicability and governance perspective, in the format suggested as a. The requirement to include BR Reports as part of the under: Annual Reports shall be mandatory for top 100 listed entities based on market capitalisation at BSE and Business Responsibility Report - Suggested NSE as on March 31, 2012. BSE and NSE shall Framework independently draw up a list of listed entities to whom Section A: General Information about the Company September 1. Corporate Identity Number (CIN) of the Company 2012 CHARTERED SECRETARY 1172 ( GN-201 ) ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 103

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2. Name of the Company S.No. Particulars Details 3. Registered address 1. DIN Number (if applicable) 2. Name 4. Website 3. Designation 5. E-mail id 4. Telephone number 6. Financial Year reported 5. e-mail id 7. Sector(s) that the Company is engaged in (industrial activity code-wise) 2. Principle-wise (as per NVGs) BR Policy/policies 8. List three key products/services that the Company (Reply in Y/N) manufactures/provides (as in balance sheet) 9. Total number of locations where business activity is S.No. Questions P1 P2 P3 P4 P5 P6 P7 P8 P9 undertaken by the Company 1. Do you have a policy/policies for.... i. Number of International Locations (Provide details of 2. Has the policy being major 5) formulated in consultation ii. Number of National Locations with the relevant 10.Markets served by the Company - Local/State/ stakeholders? National/International/ 3. Does the policy conform to any national / international standards? Section B: Financial Details of the Company If yes, specify? (50 words) 4. Has the policy being 1. Paid up Capital (INR) approved by the Board? 2. Total Turnover (INR) If yes, has it been signed by MD/owner/CEO/ 3. Total profit after taxes (INR) appropriate Board Director? 4. Total Spending on Corporate Social Responsibility (CSR) 5. Does the company have a as percentage of profit after tax (%) specified committee of the 5. List of activities in which expenditure in 4 above has been Board/ Director/Official to oversee the implementation incurred:- of the policy? a. 6. Indicate the link for the b. policy to be viewed online? c. 7. Has the policy been formally communicated to all relevant internal and Section C: Other Details external stakeholders? 8. Does the company have 1. Does the Company have any Subsidiary Company/ in-house structure to Companies? implement the policy/policies. 2. Do the Subsidiary Company/Companies participate in 9. Does the Company have a grievance redressal the BR Initiatives of the parent company? If yes, then mechanism related to the indicate the number of such subsidiary company(s) policy/policies to address 3. Do any other entity/entities (e.g. suppliers, distributors stakeholders’ grievances etc.) that the Company does business with, participate in related to the policy/policies? the BR initiatives of the Company? If yes, then indicate 10. Has the company carried out independent audit/ the percentage of such entity/entities? [Less than 30%, evaluation of the working of 30-60%, More than 60%] this policy by an internal or external agency? Section D: BR Information 2a.If answer to S.No. 1 against any principle, is ‘No’, 1. Details of Director/Directors responsible for BR please explain why: (Tick up to 2 options) a) Details of the Director/Director responsible for implementation of the BR policy/policies S.No. Questions P1 P2 P3 P4 P5 P6 P7 P8 P9 l DIN Number 1. The company has not understood the Principles l Name 2. The company is not at a l Designation stage where it finds b) Details of the BR head September ( GN -202 ) 1173 CHARTERED SECRETARY 2012 ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 104

From the Government

itself in a position to 4. Has the company taken any steps to procure goods and formulate and implement the policies on specified services from local & small producers, including principles communities surrounding their place of work? 3. The company does not have If yes, what steps have been taken to improve their financial or manpower capacity and capability of local and small vendors? resources available for 5. Does the company have a mechanism to recycle the task 4. It is planned to be done products and waste? If yes what is the percentage of within next 6 months recycling of products and waste (separately as <5%, 5- 5. It is planned to be done 10%, >10%). Also, provide details thereof, in about 50 within the next 1 year words or so. 6. Any other reason (please specify) Principle 3 3. Governance related to BR 1. Please indicate the Total number of employees. l Indicate the frequency with which the Board of 2. Please indicate the Total number of employees hired on Directors, Committee of the Board or CEO to assess temporary/contractual/casual basis. the BR performance of the Company. Within 3 3. Please indicate the Number of permanent women months, 3-6 months, Annually, More than 1 year employees. l Does the Company publish a BR or a Sustainability 4. Please indicate the Number of permanent employees Report? What is the hyperlink for viewing this report? with disabilities How frequently it is published? 5. Do you have an employee association that is recognized by management. Section E: Principle-wise performance 6. What percentage of your permanent employees is Principle 1 members of this recognized employee association? 1. Does the policy relating to ethics, bribery and 7. Please indicate the Number of complaints relating to corruption cover only the company? Yes/ No. Does it child labour, forced labour, involuntary labour, sexual extend to the Group/Joint Ventures/ harassment in the last financial year and pending, as on Suppliers/Contractors/NGOs /Others? the end of the financial year. 2. How many stakeholder complaints have been received in the past financial year and what percentage was S.No. Category No of complaints No of complaints filed during the pending as on end satisfactorily resolved by the management? If so, provide financial year of the financial year details thereof, in about 50 words or so. 1. Child labour/forced labour/involuntary Principle 2 labour 1. List up to 3 of your products or services whose design has 2. Sexual harassment 3. Discriminatory incorporated social or environmental concerns, risks employment and/or opportunities. i. 8. What percentage of your under mentioned employees ii. were given safety & skill up-gradation training in the last iii. year? 2. For each such product, provide the following details in l Permanent Employees respect of resource use (energy, water, raw material etc.) l Permanent Women Employees per unit of product(optional): l Casual/Temporary/Contractual Employees i. Reduction during sourcing/production/ distribution l Employees with Disabilities achieved since the previous year throughout the value chain? Principle 4 ii. Reduction during usage by consumers (energy, 1. Has the company mapped its internal and external water) has been achieved since the previous year? stakeholders? Yes/No 3. Does the company have procedures in place for 2. Out of the above, has the company identified the sustainable sourcing (including transportation)? disadvantaged, vulnerable & marginalized stakeholders. i. If yes, what percentage of your inputs was sourced 3. Are there any special initiatives taken by the company to sustainably? Also, provide details thereof, in about 50 engage with the disadvantaged, vulnerable and words or so. marginalized stakeholders. If so, provide details thereof, in about 50 words or so. September 2012 CHARTERED SECRETARY 1174 ( GN-203 ) ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 105

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Principle 5 3. Have you done any impact assessment of your initiative? 1. Does the policy of the company on human rights cover 4. What is your company’s direct contribution to community only the company or extend to the Group/Joint development projects- Amount in INR and the details of Ventures/Suppliers/Contractors/NGOs/Others? the projects undertaken. 2. How many stakeholder complaints have been received in 5. Have you taken steps to ensure that this community the past financial year and what percent was development initiative is successfully adopted by the satisfactorily resolved by the management? community? Please explain in 50 words, or so.

Principle 6 Principle 9 1. Does the policy related to Principle 6 cover only the 1. What percentage of customer complaints/consumer company or extends to the Group/Joint cases are pending as on the end of financial year. Ventures/Suppliers/Contractors/NGOs/others. 2. Does the company display product information on the 2. Does the company have strategies/ initiatives to address product label, over and above what is mandated as per local global environmental issues such as climate change, laws? Yes/No/N.A. /Remarks(additional information) global warming, etc? Y/N. If yes, please give hyperlink for 3. Is there any case filed by any stakeholder against the webpage etc. company regarding unfair trade practices, irresponsible 3. Does the company identify and assess potential advertising and/or anti-competitive behaviour during the environmental risks? Y/N last five years and pending as on end of financial year. If 4. Does the company have any project related to Clean so, provide details thereof, in about 50 words or so. Development Mechanism? If so, provide details thereof, 4. Did your company carry out any consumer survey/ in about 50 words or so. Also, if Yes, whether any consumer satisfaction trends? environmental compliance report is filed? 5. Has the company undertaken any other initiatives on – Annexure-2 clean technology, energy efficiency, renewable energy, Principles to assess compliance with Environmental, etc. Y/N. If yes, please give hyperlink for web page etc. Social and Governance norms 6. Are the Emissions/Waste generated by the company within the permissible limits given by CPCB/SPCB for the Principle 1: Businesses should conduct and govern financial year being reported? themselves with Ethics, Transparency and 7. Number of show cause/ legal notices received from Accountability CPCB/SPCB which are pending (i.e. not resolved to 1. Businesses should develop governance structures, satisfaction) as on end of Financial Year. procedures and practices that ensure ethical conduct at all levels; and promote the adoption of this principle Principle 7 across its value chain. Businesses should communicate 1. Is your company a member of any trade and chamber or transparently and assure access to information about association? If Yes, Name only those major ones that their decisions that impact relevant stakeholders. your business deals with: 2. Businesses should not engage in practices that are a. abusive, corrupt, or anti-competition. b. 3. Businesses should truthfully discharge their responsibility c. on financial and other mandatory disclosures. d. 4. Businesses should report on the status of their adoption 2. Have you advocated/lobbied through above associations of these Guidelines as suggested in the reporting for the advancement or improvement of public good? framework in this document. Yes/No; if yes specify the broad areas ( drop box: 5. Businesses should avoid complicity with the actions of Governance and Administration, Economic Reforms, any third party that violates any of the principles Inclusive Development Policies, Energy security, Water, contained in these Guidelines Food Security, Sustainable Business Principles, Others) Principle 2: Businesses should provide goods and Principle 8 services that are safe and contribute to sustainability 1. Does the company have specified throughout their life cycle programmes/initiatives/projects in pursuit of the policy 1. Businesses should assure safety and optimal resource related to Principle 8? If yes details thereof. use over the life-cycle of the product – from design to 2. Are the programmes/projects undertaken through in- disposal – and ensure that everyone connected with it- house team/own foundation/external NGO/government structures/any other organization? September ( GN -204) 1175 CHARTERED SECRETARY 2012 ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 106

From the Government

designers, producers, value chain members, customers feel safe and secure in discharging their responsibilities. and recyclers are aware of their responsibilities. 2. Businesses should raise the consumer's awareness of Principle 4: Businesses should respect the interests of, their rights through education, product labelling, and be responsive towards all stakeholders, especially appropriate and helpful marketing communication, full those who are disadvantaged, vulnerable and details of contents and composition and promotion of marginalized. safe usage and disposal of their products and services. 1. Businesses should systematically identify their 3. In designing the product, businesses should ensure that stakeholders, understand their concerns, define purpose the manufacturing processes and technologies required and scope of engagement, and commit to engaging with to produce it are resource efficient and sustainable. them. 4. Businesses should regularly review and improve upon 2. Businesses should acknowledge, assume responsibility the process of new technology development, deployment and be transparent about the impact of their policies, and commercialization, incorporating social, ethical, and decisions, product & services and associated operations environmental considerations. on the stakeholders. 5. Businesses should recognize and respect the rights of 3. Businesses should give special attention to stakeholders people who may be owners of traditional knowledge, and in areas that are underdeveloped. other forms of intellectual property. 4. Businesses should resolve differences with stakeholders 6. Businesses should recognize that over-consumption in a just, fair and equitable manner. results in unsustainable exploitation of our planet's resources, and should therefore promote sustainable Principle 5: Businesses should respect and promote consumption, including recycling of resources. human rights Principle 3: Businesses should promote the wellbeing 1. Businesses should understand the human rights content of all employees of the Constitution of India, national laws and policies and 1. Businesses should respect the right to freedom of the content of International Bill of Human Rights. association, participation, collective bargaining, and Businesses should appreciate that human rights are provide access to appropriate grievance Redressal inherent, universal, indivisible and interdependent in mechanisms. nature. 2. Businesses should provide and maintain equal 2. Businesses should integrate respect for human rights in opportunities at the time of recruitment as well as during management systems, in particular through assessing the course of employment irrespective of caste, creed, and managing human rights impacts of operations, and gender, race, religion, disability or sexual orientation. ensuring all individuals impacted by the business have 3. Businesses should not use child labour, forced labour or access to grievance mechanisms. any form of involuntary labour, paid or unpaid. 3. Businesses should recognize and respect the human 4. Businesses should take cognizance of the work-life rights of all relevant stakeholders and groups within and balance of its employees, especially that of women. beyond the workplace, including that of communities, 5. Businesses should provide facilities for the wellbeing of consumers and vulnerable and marginalized groups. its employees including those with special needs. They 4. Businesses should, within their sphere of influence, should ensure timely payment of fair living wages to meet promote the awareness and realization of human rights basic needs and economic security of the employees. across their value chain. 6. Businesses should provide a workplace environment that 5. Businesses should not be complicit with human rights is safe, hygienic humane, and which upholds the dignity abuses by a third party. of the employees. Business should communicate this provision to their employees and train them on a regular Principle 6: Business should respect, protect, and make basis. efforts to restore the environment 7. Businesses should ensure continuous skill and 1. Businesses should utilize natural and manmade competence upgrading of all employees by providing resources in an optimal and responsible manner and access to necessary learning opportunities, on an equal ensure the sustainability of resources by reducing, and non-discriminatory basis. They should promote reusing, recycling and managing waste. employee morale and career development through 2. Businesses should take measures to check and prevent enlightened human resource interventions. pollution. They should assess the environmental damage 8. Businesses should create systems and practices to and bear the cost of pollution abatement with due regard ensure a harassment free workplace where employees to public interest.

September 2012 CHARTERED SECRETARY 1176 ( GN-205 ) ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 107

From the Government

3. Businesses should ensure that benefits arising out of 1. Businesses, while serving the needs of their customers, access and commercialization of biological and other should take into account the overall well-being of the natural resources and associated traditional knowledge customers and that of society. are shared equitably. 2. Businesses should ensure that they do not restrict the 4. Businesses should continuously seek to improve their freedom of choice and free competition in any manner environmental performance by adopting cleaner while designing, promoting and selling their products. production methods, promoting use of energy efficient 3. Businesses should disclose all information truthfully and and environment friendly technologies and use of factually, through labelling and other means, including renewable energy. the risks to the individual, to society and to the planet 5. Businesses should develop Environment Management from the use of the products, so that the customers can Systems (EMS) and contingency plans and processes exercise their freedom to consume in a responsible that help them in preventing, mitigating and controlling manner. Where required, businesses should also environmental damages and disasters, which may be educate their customers on the safe and responsible caused due to their operations or that of a member of its usage of their products and services. value chain. 4. Businesses should promote and advertise their products 6. Businesses should report their environmental in ways that do not mislead or confuse the consumers or performance, including the assessment of potential violate any of the principles in these Guidelines. environmental risks associated with their operations, to 5. Businesses should exercise due care and caution while the stakeholders in a fair and transparent manner. providing goods and services that result in over 7. Businesses should proactively persuade and support its exploitation of natural resources or lead to excessive value chain to adopt this principle. conspicuous consumption. 6. Businesses should provide adequate grievance handling Principle 7: Businesses, when engaged in influencing mechanisms to address customer concerns and public and regulatory policy, should do so in a feedback. responsible manner 1. Businesses, while pursuing policy advocacy, must Direct Market Access - ensure that their advocacy positions are consistent with 25 Clarification the Principles and Core Elements contained in these Guidelines. [Issued by the Securities and Exchange Board of India vide 2. To the extent possible, businesses should utilize the trade CIR/MRD/DP/20/2012 dated 02.08.2012.] and industry chambers and associations and other such collective platforms to undertake such policy advocacy. 1. SEBI, vide circular no. MRD/DoP/SE/Cir-7/2008 dated April 03, 2008 introduced Direct Market Access Principle 8: Businesses should support inclusive (hereinafter referred to as “DMA”). Further, SEBI vide growth and equitable development circular no. MRD/DoP/SE/Cir-03/2009 dated February 20, 1. Businesses should understand their impact on social and 2009 permitted institutional investors to use DMA through economic development, and respond through the Investment Managers. appropriate action to minimise the negative impacts. 2. In light of the feedback received from the market 2. Businesses should innovate and invest in products, participants and the several measures prescribed by SEBI technologies and processes that promote the wellbeing to simplify and rationalize the “Trading Account Opening of society. Process”, the abovementioned SEBI circulars on DMA 3. Businesses should make efforts to complement and stands modified to the following extent: support the development priorities at local and national a. The facility of DMA provided by the stock broker shall levels, and assure appropriate resettlement and be used by the client or an investment manager of the rehabilitation of communities who have been displaced client. A SEBI registered entity shall be permitted to act owing to their business operations. as an investment manager on behalf of institutional 4. Businesses operating in regions that are underdeveloped clients. In case the facility of DMA is used by the client should be especially sensitive to local concerns. through an investment manager, the investment manager may execute the necessary documents on Principle 9: Businesses should engage with and provide behalf of the client(s). value to their customers and consumers in a b. The point 3 on Client Authorization and Broker responsible manner Client Agreement of the SEBI circular no.

September ( GN -206 ) 1177 CHARTERED SECRETARY 2012 ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 108

From the Government

MRD/DoP/SE/Cir-7/2008 dated April 03, 2008 shall be of, and to regulate the securities market. deleted. Harini Balaji c. In order to bring uniformity on the requirement of Deputy General Manager documentation for trading account opening process, in view of the SEBI circular no CIR/MIRSD/16/2011 dated ANNEXURE I – TERMS AND CONDITIONS August 22, 2011, the specific Broker – Client Agreement for the purpose of DMA shall be replaced PART – A: DMA FACILITY USED BY THE CLIENT with the “Terms and Condition” document as specified at Annexure I. The “Terms and Conditions” shall be 1. The client is expected to be fully aware of the risks provided to the client or investment manager acting on associated with the market and the financial instruments behalf of a client (s) for availing the DMA facility. In being traded on stock exchanges through DMA. The client case the DMA facility provided by the stock broker is shall be responsible for complying with laws, rules, used by the client the paragraphs one to eighteen of regulations, notifications etc issued by regulatory Part A of Annexure-I shall be applicable. In case the authorities as may be applicable from time to time. DMA facility provided by the stock broker is used by the 2. The client shall ensure that DMA facility provided by the client through an investment manager the paragraphs Broker is used only to execute the trades of the client and one to eighteen of Part B of Annexure-I shall be shall not be used for transactions on behalf of any other applicable and additionally, the investment manager person / entity. shall provide to the stock broker the details as specified 3. The client shall be responsible for ensuring that, only at Annexure-II. persons authorized by it shall access and use the DMA d. Exchange shall specify from time to time the categories facility provided by the Broker. All orders originating from of investors to whom the DMA facility can be extended. such facility / system shall be deemed to be authorized by Currently, this facility is available for institutional the client. clients. Brokers shall specifically authorize clients or 4. Where the client accesses or proposes to access the investment managers acting on behalf of clients for Broker’s DMA platform through external applications, providing DMA facility, after fulfilling Know Your Client including but not restricted to services of third party service requirements and carrying out necessary due provider(s), own application(s), etc., the client shall ensure diligence. The broker shall maintain proper records of that such applications have adequate security features such due diligence. including but not limited to access controls, password e. The para 2 (a) and 2 (b) of SEBI circular no protection etc; and that appropriate agreement(s) with MRD/DoP/SE/Cir-03/2009 dated February 20, 2009 such third party service provider(s) etc. for ensuring shall be deleted. secured access and communication has been executed f. The other provision specified in SEBI circular no and are in place. MRD/DoP/SE/Cir-7/2008 dated April 03, 2008 and 5. The client shall ensure that no person authorized by them SEBI circular no. MRD/DoP/SE/Cir-03/2009 dated to place orders through DMA facility provided by the February 20, 2009 shall remain applicable. broker has been / is involved in any adverse action by any 3. Stock Exchanges are advised to: regulatory authorities in any jurisdiction. . a. take necessary steps and put in place necessary 6. The client shall provide the names of authorized individual systems for implementation of the above. users to the broker prior to placing DMA orders. b. make necessary amendments to the relevant bye-laws, 7. The client shall not use or allow the use of DMA facility to rules and regulations for the implementation of the engage in any form of market misconduct including insider above decision. trading and market manipulation or conduct that is c. bring the provisions of this circular to the notice of the otherwise in breach of applicable laws, rules and member of the stock exchange and also to disseminate regulation. the same on the website. 8. The client is aware that Algorithmic trading i.e. generation d. communicate to SEBI, the status of implementation of of orders using automated execution logic is governed by the provisions of this circular in the Monthly Algorithmic trading guidelines issued by SEBI and Development Report. Exchanges and requires prior approval of the exchanges. 4. This circular is being issued in exercise of powers The client shall ensure that new algorithms and changes conferred under Section 11 (1) of the Securities and to existing approved algorithms are not used through the Exchange Board of India Act, 1992 to protect the interests DMA facility without prior approval of concerned stock of investors in securities and to promote the development exchanges. The client shall ensure that it has necessary checks and balances, in place to identify and control September dysfunctional algorithms and the Broker shall have the 2012 CHARTERED SECRETARY 1178 ( GN-207 ) ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 109

From the Government

right to shut down the DMA facility and remove any incidental, indirect, or similar damages from the use or outstanding client orders in case of any suspected inability to use the service or any part thereof. dysfunctional algo. 16. The Broker shall have the right to withdraw the DMA 9. The client is aware that authentication technologies and facility in case of:- strict security measures are required for routing orders l Breach of the limits imposed by the broker or any through DMA facility and undertakes to ensure that the regulatory authority. password of the client and/or his representative are not l On account of any misuse of the DMA facility by the revealed to any third party. client or on instructions from SEBI/Exchanges. 10. The client acknowledges that all DMA orders placed by l Any other reason, at the discretion of the broker them through the DMA facility would be validated by the Broker shall endeavor to give reasonable notice to the risk management system of the broker. The Broker has client in such instances. the right to accept or reject any DMA order placed by the 17. The Broker shall not be liable or responsible for non- client at its sole discretion. execution of the DMA orders of the client due to any 11. The client shall be solely responsible for all acts or link/system failure at the client/ Broker/ exchange(s) end. omissions of any person using a DMA facility and shall be 18. This document shall not be altered, amended and /or bound to accept and settle all transactions executed modified by the parties in a manner that shall be in through the DMA facility provided by the Broker contravention of any other provisions of this document. notwithstanding that such order(s) may have been Any additional terms and conditions should not be in submitted erroneously or by an unauthorized user, or that contravention with rules / regulations /bye-laws/circulars, its data is inaccurate or incomplete when submitted, or the of the relevant authorities including applicable stock client subsequently determines for whatever reason that exchanges as amended from time to time. the order should not have been submitted. 12. The client shall notify the Broker in the event of DMA PART – B: DMA FACILITY USED BY THE CLIENT facility being compromised. Upon receipt of this notice, THROUGH AN INVESTMENT MANAGER client’s DMA facility shall be promptly disabled but the 1. The client shall be solely responsible for all acts or client shall continue to be responsible for any misuse of omissions of any person using a DMA facility and shall be the DMA facility or any orders placed through the DMA bound to accept and settle all transactions executed facility as a result of the compromise of the DMA facility at through the DMA facility provided by the Broker to the their end. The Broker shall not be liable for any loss, investment manager acting on behalf of the client, liability or cost whatsoever arising as a result of any notwithstanding that such order(s) may have been unauthorized use of DMA facility at the client’s end. submitted erroneously or by an unauthorized user, or that 13. In the event of winding-up or insolvency of the client or his its data is inaccurate or incomplete when submitted, or the otherwise becoming incapable of settling their DMA client subsequently determines for whatever reason that obligation, broker may close out the transaction of the the order should not have been submitted. client as permissible under bye-laws, rules, regulations of 2. The investment manager is expected to be fully aware of the exchanges. The client shall continue to be liable for the risks associated with the market and the financial any losses, costs, damages arising thereof. instruments being traded on stock exchanges through 14. The client is fully aware of the risks of transmitting DMA DMA. The investment manager shall be responsible for orders to the Broker’s DMA facility through vendor complying with laws, rules, regulations, notifications etc systems or service providers and the Broker is not issued by regulatory authorities as may be applicable responsible for such risks. from time to time. 15. The client should be aware of the fact that neither the DMA 3. Where the DMA facility provided by the Broker is used to facility will be uninterrupted nor error free nor the results execute trade on behalf of one or more clients, by the that may be obtained from the use of the service or as to investment manager, then it is represented and warranted the timeliness, sequence, accuracy, completeness, that, at each time an order is placed by such investment reliability or content of any information, service or manager through the DMA facility of the Broker - transaction provided through DMA. The DMA service is a) The investment manager has due authority to deal on provided on an "as is", "as available" basis without behalf of the client(s) through the Broker, specifying the warranties of any kind, either express or implied, including, roles and responsibilities of the investment manager in but not limited to, those of information access, order execution of transactions on behalf of the client(s). execution, merchantability and fitness for a particular b) The investment manager shall comply with any purpose. The Broker shall not be liable for any loss, applicable laws, rules and regulations affecting or damage or injury including but not limited to direct lost profits or trading losses or any consequential, special, September ( GN -208 ) 1179 CHARTERED SECRETARY 2012 ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 110

From the Government

relating to trading operations. investment manager shall ensure that it has necessary c) The investment manager and the client(s) are bound by checks and balances, in place to identify and control the terms and conditions hereof; dysfunctional algorithms and the Broker shall have the d) The investment manager using the DMA facility for right to shut down the DMA facility and remove any routing client(s) orders shall not cross trades of their outstanding client orders in case of any suspected client(s) with each other. Accordingly, all orders should dysfunctional algo. be offered in the market. 10. The investment manager is aware that authentication e) The stock exchange or SEBI may at any time call for technologies and strict security measures are required for any information from a client(s) or an investment routing orders through DMA facility and undertakes to manager acting on behalf of the client(s) with respect ensure that the password of the investment manager to any matter relating to the activity of the investment and/or his representative are not revealed to any third manager. The investment manager shall also furnish party. any information specifying the roles and responsibilities 11. The investment manager acknowledges that all DMA of the investment manager in execution of transactions orders placed by them through the DMA facility would be on behalf of the client(s), as and when required by the validated by the risk management system of the broker. exchanges or SEBI. The Broker has the right to accept or reject any DMA order 4. The investment manager shall be responsible for ensuring placed by the investment manager at its sole discretion. that, only persons authorized by it shall access and use 12. The investment manager shall notify the Broker in the the DMA facility provided by the Broker. All orders event of DMA facility being compromised. Upon receipt of originating from such facility / system shall be deemed to this notice, client’s DMA facility shall be promptly disabled be authorized by the client. but the client shall continue to be responsible for any 5. Where the investment manager accesses or proposes to misuse of the DMA facility or any orders placed through access the Broker’s DMA platform through external the DMA facility as a result of the compromise of the DMA applications, including but not restricted to services of third facility at their end. The Broker shall not be liable for any party service provider(s), own application(s), etc., the loss, liability or cost whatsoever arising as a result of any investment manager shall ensure that such applications unauthorized use of DMA facility at the client’s end. have adequate security features including but not limited 13. In the event of winding-up or insolvency of the client or his to access controls, password protection etc; and that otherwise becoming incapable of honoring their DMA appropriate agreement(s) with such third party service obligation, broker may close out the transaction of the provider(s) etc. for ensuring secured access and client as permissible under bye-laws, rules, regulations of communication has been executed and are in place. the exchanges. The client shall continue to be liable for 6. The investment manager shall ensure that no person any losses, costs, damages arising thereof. authorized by them to place orders through DMA facility 14. The investment manager is fully aware of the risks of provided by the broker has been / is involved in any transmitting DMA orders to the Broker’s DMA facility adverse action by any regulatory authorities in any through vendor systems or service providers and the jurisdiction. Broker is not responsible for such risks. 7. The investment manager shall provide the names of 15. The investment manager should be aware of the fact that authorized individual users to the broker prior to placing neither the DMA facility will be uninterrupted nor error free DMA orders. nor the results that may be obtained from the use of the 8. The investment manager shall not use or allow the use of service or as to the timeliness, sequence, accuracy, DMA facility to engage in any form of market misconduct completeness, reliability or content of any information, including insider trading and market manipulation or service or transaction provided through DMA. The DMA conduct that is otherwise in breach of applicable laws, service is provided on an "as is", "as available" basis rules and regulation. without warranties of any kind, either express or implied, 9. The investment manager is aware that Algorithmic trading including, but not limited to, those of information access, i.e. generation of orders using automated execution logic order execution, merchantability and fitness for a is governed by Algorithmic trading guidelines issued by particular purpose. The Broker shall not be liable for any SEBI and Exchanges and requires prior approval of the loss, damage or injury including but not limited to direct exchanges. The investment manager shall ensure that lost profits or trading losses or any consequential, special, new algorithms and changes to existing approved incidental, indirect, or similar damages from the use or algorithms are not used through the DMA facility without inability to use the service or any part thereof. prior approval of concerned stock exchanges. The 16. The Broker shall have the right to withdraw the DMA facility in case of:- l September Breach of the limits imposed by the broker or any 2012 CHARTERED SECRETARY 1180 ( GN-209) ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 111

From the Government

regulatory authority. 1. Please refer to SEBI circular No SEBI/MRD/DEP/Cir-2/06 l On account of any misuse of the DMA facility by the dated January 19, 2006. client/ investment manager or on instructions from 2. In addition to the above circular, it has now been decided SEBI/Exchanges. that in case of IPO for debt securities the ISINs shall be l Any other reason, at the discretion of the broker activated only on the date of commencement of trading on Broker shall endeavor to give reasonable notice to the the stock exchange. client in such instances. 3. Further, in order to curtail the transfer of additional issue of 17. The Broker shall not be liable or responsible for non- shares/securities viz. further public offerings, rights issue, execution of the DMA orders of the client due to any preferential allotment and bonus issue of the listed link/system failure at the client/ Broker/ exchange(s) end. company, prior to receipt of final listing/ trading approval , 18. This document shall not be altered, amended and /or it has been decided that the depositories shall devise a modified by the parties in a manner that shall be in mechanism so that such new securities created shall be contravention of any other provisions of this document. frozen till the time final listing/ trading permission is Any additional terms and conditions should not be in granted by the exchange. contravention with rules / regulations /bye-laws/circulars, 4. In order to achieve the above, the Depositories are of the relevant authorities including applicable stock advised to allot such additional shares/securities under a exchanges as amended from time to time. new temporary ISIN which shall be kept frozen. Upon receipt of the final listing/ trading permission from the Annexure II exchange for such additional shares/ securities, the On the letter head of the Investment manager shares/securities credited in the new temporary ISIN shall be debited and the same would get credited in the PART A preexisting ISIN for the said security. Thereafter, the DETAILS OF THE INVESTMENT MANAGER: additional securities shall be available for trading. NAME OF THE 5. The exchanges are advised to provide the details to the INVESTMENT MANAGER: depositories whenever final listing/trading permission is NAME OF THE HOME given to securities. REGULATOR 6. The Depositories are advised to:- a) make amendments to the relevant bye-laws, rules and COUNTRY OF regulations for the implementation of the above JURISDICTION OF HOME decision immediately, as may be applicable/necessary ; REGULATOR b) bring the provisions of this circular to the notice of their DPs and also to disseminate the same on their REGISTERED/ website; and REGULATED IN HOME 7. This circular is being issued in exercise of the powers JURISDICTION AS: conferred by Section 11 (1) of Securities and Exchange Board of India Act, 1992 and section 19 of the SEBI REGISTRATION Depositories Act, 1996 to protect the interest of investors NUMBER: in securities and to promote the development of, and to regulate, the securities market. PART B Harini Balaji CLIENT(s) DETAILS: Deputy General Manager

S. NAME OF NAME OF THE REGULATED REGISTRATION PAN System for Making Application to No. THE ENTITY REGULATOR IN INDIA AS NUMBER 27 Public issue of Debt Securities [Issued by the Securities and Exchange Board of India vide CIR/IMD/DF-1/20/2012 dated 27.07.2012.] Activation of ISIN in case of 26 additional issue of shares/ 1. Regulation 10 of the SEBI (Issue and Listing of Debt securities Securities) Regulations, 2008 (the “SEBI Debt Regulations”) provides that: [Issued by the Securities and Exchange Board of India vide “An issuer proposing to issue debt securities to the public CIR/MRD/DP/21/2012 dated 02.08.2012.] September ( GN -210 ) 1181 CHARTERED SECRETARY 2012 ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 112

From the Government

through the on-line system of the designated stock ANNEXURE exchange shall comply with the relevant applicable 1. Method of Application: Issuers shall provide the requirements as may be specified by the Board.” following options for making application to public issues of 2. Regulation 31(2) of SEBI (Issue and Listing of Debt debt securities: Securities) Regulations, 2008 provides that:- 1.1. Direct Applications by using online interface to be “In particular, and without prejudice to the generality of the provided by Stock Exchanges with Online Payment foregoing power and provisions of these regulations, such Facility orders or circulars may provide for all or any of the 1.2. Applications through Lead Managers/Syndicate following matters, namely: Members/ Sub Syndicate Members / Trading Member Electronic issuances and other issue procedures including of stock exchange(s) using ASBA facility the procedure for price discovery….” 1.3. Applications through Banks using ASBA facility 3. In view of the above, in order to facilitate a system for 1.4. Application through Lead Manager/Syndicate Member/ making online applications for public issue of debt Sub Syndicate Member / Trading Member of stock securities and to reduce the timelines of the issue process exchange(s) without use of ASBA facility. for public issue of debt securities, it has been decided to: 1.5. Application through Lead Manager/Syndicate a. Extend ASBA facility to public issues of debt securities; Member/ Sub Syndicate Member/ Trading Member of and stock exchange(s) for applicants who intend to hold b. Provide option for subscribing to debt securities debt securities in physical form. through an online internet interface with a facility to 2. Procedure: The procedure to be followed for the above make online payment. options shall be as detailed below: c. Apply the timelines for the issue process as provided in 2.1. Direct Applications by using online interface through SEBI Circular CIR/CFD/DIL/1/2011 dated April 29, stock exchange(s) with Online Payment Facility 2011 or as notified by SEBI from time to time. 2.1.1. Issuer shall provide, through a recognized stock 4. The detailed procedure for providing the above facilities is exchange which offers such facility, an online laid out in Annexure to this circular. The circular shall be interface enabling direct application by investors to applicable with immediate effect subject to putting in place the public issue. necessary systems and infrastructure by the stock 2.1.2. The online interface shall provide an online payment exchanges. facility and ensure compliance with the requirements 5. Recognized Stock Exchanges are directed to: as specified in this section. a. Comply with the conditions laid down in this circular 2.1.3. Only investors with demat account shall be permitted b. Put in place necessary systems and infrastructure for to make an application using the online interface. implementation of this circular. 2.1.4. The investor shall be required to log on to the stock c. Make consequential changes, if any, to the bye-laws of exchange platform and provide requisite information the Exchange as may be applicable and necessary. as per the application form. d. Communicate to member brokers/ sub-brokers and 2.1.5. For compliance with KYC requirements, the interface create awareness amongst them about their roles and shall rely on the Depository Participant ID, responsibilities in such issues. Beneficiary Owner Account No which shall be 6. Depositories, Merchant Bankers and Registrars are validated online from the Depositories. directed to: 2.1.6. The investor shall make payment for the debt a. Comply with the conditions laid down in this circular securities through the payment gateway provided by b. Put in place necessary systems and infrastructure for the online interface. The exchange shall arrange to implementation of this circular. send SMS/ email confirmation regarding receipt of c. Create awareness among issuers and investors about funds to the investor. the various modes available for making applications 2.1.7. On successful submission of the application form, a 7. This circular is issued in exercise of powers conferred unique acknowledgement number shall be under Section 11(1) of the Securities and Exchange Board generated. of India Act, 1992 read with Regulation 31(2) of SEBI 2.1.8. Investors shall be able to cancel their application (Issue and Listing of Debt Securities) Regulations, 2008. based upon the unique acknowledgement number. 8. This circular is available on SEBI website at This unique acknowledgement number shall be www.sebi.gov.in under the category “Legal Framework” quoted by the applicant for their grievances, if any. and under the drop down “Corp Debt Market”. 2.1.9. All online payments shall be routed to the Escrow Maninder Cheema Account of the issuer. Deputy General Manager 2.1.10. Upon allotment, the Registrar shall credit securities to September the demat account of the applicant and in case of 2012 CHARTERED SECRETARY 1182 ( GN-211 ) ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 113

From the Government

refund, the refund amount shall be credited directly to captured in the electronic book as obtained from the the investor’s bank account. stock exchanges and the payment received for the 2.1.11. Optional facility may be provided to the applicant for purpose of allotment and reconciliations of funds selecting broker name and broker code, if any, of the received. broker who referred the issue to the applicant. 2.3.7. The Registrar shall credit the securities in the demat 2.1.12. As the application shall be made online, there shall no account of successful allottees. movement of any document from the Stock 2.3.8. The Registrar shall give refund amount or excess Exchange(s) to the Registrar. application amount to the investor directly as per 2.2. Applications through Lead Manager/Syndicate bank account details provided in the demat account Member/ Sub Syndicate Member / Trading Member of of the applicant. stock exchange(s) using ASBA facility and 2.4. Applications for allotment in physical form through Applications through Banks using ASBA facility Lead Manager/Syndicate / Sub Syndicate Member or 2.2.1. Issuers shall offer ASBA mechanism as an alternative Trading Member method for making an application for public issue of 2.4.1. Issuer may also provide facility for making debt securities. However, it shall not be compulsory applications in physical form for investors who do not to make application through ASBA. have demat accounts. 2.2.2. In respect of ASBA applications, all existing rules, 2.4.2. For allotment in physical mode, the applicant shall be regulations and procedures as notified by SEBI from required to comply with KYC norms specified by SEBI time to time shall be followed. by submitting documents for identity and address 2.2.3. In addition, application for debt securities using ASBA proof. facility may also be offered by Trading Member(s) of 2.4.3. Such applications shall be collected by the Lead Stock Exchange(s) who are not empanelled as Manager, Syndicate/Sub Syndicate member or Syndicate /Sub-syndicate Members. All rules, Trading member who shall regulations and procedures applicable to Lead 2.4.3.1. verify and check required KYC documents Manager / Syndicate/Sub syndicate members shall submitted by the investor along with the mutatis mutandis be applicable to such Trading application Member(s) of Stock Exchange(s). 2.4.3.2. upload application details required for 2.3. Applications through Lead Manager/Syndicate / Sub allotment on the stock exchange platform. Syndicate Member / Trading Member through 2.4.3.3. provide acknowledgment of the application Collecting Banks without using ASBA facility to the investor. 2.3.1. Facility for making online applications through Lead 2.4.4. The application along with payment instrument Manager/Syndicate/Sub-syndicate Member/ Trading favoring the Escrow Account of the issuer shall be Member using normal cheque payment method shall submitted by the Lead Manager, Syndicate/Sub also be available. Syndicate member or Trading member to the 2.3.2. Only investors with demat account shall be permitted Collecting Bank. to make such applications. 2.4.5. The Collecting Bank shall realize the payment 2.3.3. For such applications, the Lead instrument and shall send details of such applications Manager/Syndicate/Sub-syndicate Member/ Trading forms, along with KYC documents to the Registrar. Member shall upload details of applications on the 2.4.6. The Registrar shall match the application details with online platform of the stock exchanges. the application details received from Stock 2.3.4. Lead Manager/Syndicate / Sub-syndicate Member / Exchanges, and carry out necessary checks and Trading Member shall also download the forms from validations and reconciliation of funds received from stock exchanges platforms or use physical the Collecting Banks. application forms and submit these forms along with 2.4.7. The Registrar shall dispatch the physical certificate to cheques/drafts/payment instrument to the Collecting the applicant as per address provided in the Banks. application. In case KYC documents are not proper, 2.3.5. The Collecting Banks shall realize the payments for Registrar shall hold back physical certificate pending these applications in the Escrow Account of the receipt of complete KYC documents from investor. issuer and shall give details of the same to the 2.4.8. The Registrar shall send the refund amount or excess Registrar. These application forms shall be forwarded application amount to the applicant as per the bank to Registrar for procurement analysis and resolution account details provided in the application. of investor grievances as per procedure followed in 3. Roles and Responsibilities: While providing the options equity securities issuances. 2.3.6. The Registrar shall match the application details September ( GN -212 ) 1183 CHARTERED SECRETARY 2012 ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 114

From the Government

for making applications as detailed above, the obligations Depositories database. and responsibilities of various intermediaries shall be as 3.3.2.5. generate an issue specific code from the on- under: line platform, so that participants on the 3.1. Issuer online platform do not face any problem in 3.1.1. The issuer shall use an on-line platform provided by segregating the ASBA issue-wise. stock exchange(s) for receiving applications in public 3.3.2.6. providing facilities of online payment by the issue of debt securities. investor through payment gateway or any 3.1.2. For this purpose, the issuer shall enter into an other mechanism agreement with the stock exchange(s) which offer 3.3.3. The Stock Exchanges shall be responsible for such system. 3.3.3.1. accurate, timely and secured transmission 3.1.3. The agreement shall specify inter-alia, the inter se of the electronic application file uploaded by rights, duties, responsibilities and obligations of the all participants on the online platform, to the issuer and stock exchange(s). registrar. 3.1.4. The agreement shall also provide for a dispute 3.3.3.2. providing the necessary payment gateway resolution mechanism between the issuer and the interface for receipt of funds for direct stock exchange(s). interface to investors. 3.1.5. The issuer shall maintain a single escrow account for 3.3.3.3. ensuring smooth movement of funds to the collecting application money through all the methods. Escrow account of the issuer. 3.2. Registrar 3.3.3.4. disseminating the issue information on 3.2.1. The registrar shall have an online or system driven Exchange web site on a real time basis interface with the Stock Exchange platform to get across all categories and types of options. updated information pertaining to issues. 3.3.3.5. ensuring that any Trading Member does not 3.2.2. The Registrar shall collect aggregate applications levy a service fee on his clients/investors in details from the stock exchanges platform to decide lieu of his services in this regard. the eligible applications and process the allotment as 3.3.4. Notwithstanding the responsibility of the Lead per applicable SEBI Regulations. Managers/ Syndicate Members as laid down in SEBI 3.2.3. Where the issuer has signed agreements with regulations, the Stock Exchange shall be responsible multiple stock-exchanges, the Registrar shall ensure for addressing investor grievances arising from that the allotment is done on date time priority. applications submitted online through the stock 3.2.4. An application without valid application amount shall exchange platform or through their Trading Members. be treated as invalid application by the Registrar. 3.4. Lead Manager/Syndicate Member / Sub – syndicate 3.2.5. The Registrar shall credit securities/dispatch Member / Trading Member certificates to all valid allottees. 3.4.1. The Lead Manager /Syndicate/Sub-syndicate 3.2.6. The Registrar shall ensure refund of application Member or Trading Member shall be responsible for amount or excess application amount in the bank addressing any investor grievances arising from the account of the applicant as stated in its demat applications uploaded by them in respect of quantity, account. price or any other data entry or other errors made by 3.3. Stock Exchange them. 3.3.1. Stock Exchanges shall provide a platform for making 3.4.2. If the Lead Manager / Syndicate/Sub-syndicate applications through member or Trading Member has not entered any 3.3.1.1. Syndicate Member/ Sub Syndicate Member/ details correctly on the stock exchanges platform and Trading Member of stock exchange(s) it results on the mismatch with the data obtained by 3.3.1.2. Web-enabled direct applications from the Registrar from the Depositories, the Lead investors with Online Payment Facility Manager / Syndicate/subsyndicate member or 3.3.2. The on-line web enabled platform shall provide Trading Member shall be responsible for rejection of 3.3.2.1. all appropriate fields, required for public such applications. issue of debt securities, as per SEBI Cir No. 3.5. Collecting Banks IMD/DF-1/19/2012 dated July 25, 2012. 3.5.1. The Collecting Bank shall be responsible for 3.3.2.2. issue opening/ closing date. addressing any investor grievances arising from non 3.3.2.3. facility for generation of acknowledgement confirmation of funds to the Registrar despite number. successful realization of the payment instrument in 3.3.2.4. validation of DP ID, Client ID and PAN favour of the issuer’s Escrow Account, or any delay or entered in the online system with the operational lapse by the Collecting Bank in sending September the forms to the Registrar. 2012 CHARTERED SECRETARY 1184 ( GN-213 ) ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 115

From the Government

contained in paragraph 3.1.1 of the circular ibid and decided to permit a citizen of Pakistan or an entity incorporated in Pakistan to make investments in India, Economic under the Government route, in sectors/activities other than defence, space and atomic energy.

Laws 3.0 Amendment to paragraph 3.1.1: 3.1 Accordingly, Paragraph 3.1.1 of Circular 1 of 2012- Review of the Foreign Direct Consolidated FDI Policy', effective from 10.4.2012, is 28 Investment policy - permitting amended to read as below: investments from Pakistan "3.1.1 A non-resident entity can invest in India, subject to the FDI Policy. A citizen of Bangladesh or an entity [Issued by the DIPP, Ministry of Commerce & Industry vide incorporated in Bangladesh can invest only under the Press note No. 3 (2012 Series) dated 01.08.2012.] Government route. A citizen of Pakistan or an entity incorporated in Pakistan can invest, only under the 1.0 Present Position: Government route, in sectors/activities other than 1.1 As per paragraph 3.1.1 of Circular 1 of 2012- defence, space and atomic energy." Consolidated FDI Policy', effective from 10.04.2012, investment from a citizen of Pakistan or an entity 4.0 The above decision will take immediate effect. incorporated in Pakistan is not permitted. 2.0 Revised Position: Anjali Prasad 2.1 The Government of India has reviewed the policy, as Joint Secetary

September ( GN -214 ) 1185 CHARTERED SECRETARY 2012 ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 116

News from the Institute

22 Sh. Yayavaram Sriniwas Arun FCS - 6940 SIRC 23 Ms Jyoti Rani FCS - 6941 NIRC Institute 24 Sh. Lokesh Laxmanbhai Dave FCS - 6942 WIRC 25 Sh. Sanjay Kumar Gupta FCS - 6943 EIRC 26 Sh. Devendra Jarwal FCS - 6944 NIRC 27 Ms. R Ovia FCS - 6945 SIRC 28 Sh. Amul Urdhwareshe FCS - 6946 WIRC News 29 Sh. Nisha Laxmidas Hindocha FCS - 6947 WIRC 30 Sh. S Vijay Mahindhran FCS - 6948 SIRC 31 Sh. Miten G Chawda FCS - 6949 WIRC CONGRATULATIONS 32 Sh. Anand Kumar Das FCS - 6950 WIRC ASSOCIATES* SHRI SUTANU SINHA, FCS, 1 Ms. Deeksha Garg ACS - 30582 NIRC on his assuming the office of Chief Executive 2 Mr. Pratick Saha ACS - 30583 EIRC Designate of the Institute of Company 3 Ms. Ekta Nopany ACS - 30584 EIRC Secretaries of India w.e.f. 31.08.2012. Earlier 4 Ms. Neetu Agarwal ACS - 30585 NIRC he was Sr. Director (Academics & Professional 5 Ms. Shilpa Bhatt ACS - 30586 NIRC Development) of the Institute. 6 Mr. Suryanarayanan S ACS - 30587 SIRC 7 Mr. Akshay Anant Kulkarni ACS - 30588 WIRC 8 Mr. Bhavik Manoj Shah ACS - 30589 WIRC 9 Mr. Amit Suresh Joshi ACS - 30590 WIRC 10 Mr. Hansraj Bohara ACS - 30591 NIRC MEMBERS ADMITTED 11 Sh. Nand Kishore Goyal ACS - 30592 NIRC 12 Mr. Narain Ka Raamkumar ACS - 30593 SIRC 13 Mr. Vishal Kumar Kaushik ACS - 30594 NIRC Sl. Name Membership Region 14 Mr. Ghanshyam Kumar ACS - 30595 NIRC 15 Mr. Arun Kumar ACS - 30596 NIRC No. No. 16 Mr. Rahul Gupta ACS - 30597 NIRC 17 Mr. Sachin Kumar ACS - 30598 NIRC 18 Ms. Akriti Sharma ACS - 30599 NIRC FELLOWS* 19 Ms. Aruna Nagori ACS - 30600 NIRC 1 Sh. P Periaswami FCS - 6919 SIRC 20 Ms. Payal Mainani ACS - 30601 NIRC 2 Sh. Adarsh Kumar Agarwal FCS - 6920 EIRC 21 Ms. Deepshikha Lohmorh ACS - 30602 NIRC 3 Mrs. Supriya Jalan FCS - 6921 EIRC 22 Ms. Jyoti Rajput ACS - 30603 NIRC 4 Sh. Sanjog Diwan FCS - 6922 NIRC 23 Mr. S Vadivel ACS - 30604 SIRC 5 Sh. Sanjay Kumar Gupta FCS - 6923 EIRC 24 Ms. Pooja Sureshchandra Kanani ACS - 30605 WIRC 6 Sh. G Nagaraju FCS - 6924 SIRC 25 Ms. Gourishwari Rajput ACS - 30606 WIRC 7 Sh. L Chandrasekhar FCS - 6925 SIRC 26 Mr. Rahul Dattatraya Chandratre ACS - 30607 WIRC 8 Sh. B Muthukumar FCS - 6926 SIRC 27 Mr. Neha Gandhi ACS - 30608 WIRC 9 Ms. Shruti Rahul Kanhere FCS - 6927 WIRC 28 Mr. Abhishek Omprakash Jhanwar ACS - 30609 WIRC 10 Sh. Dinesh Kumar Verma FCS - 6928 EIRC 29 Ms. Swati Shriomprakash Malu ACS - 30610 WIRC 11 Sh. Mohit Gupta FCS - 6929 NIRC 30 Ms. Shilpa Veeresh H M ACS - 30611 SIRC 12 Ms. Sweety Aggarwal FCS - 6930 NIRC 31 Mr. Sivaraman R S ACS - 30612 SIRC 13 Sh. S Vasudevan FCS - 6931 SIRC 32 Ms. Swati Jayprakash Zawar ACS - 30613 WIRC 14 Sh. Shri Ram Motilal Gaud FCS - 6932 WIRC 33 Mr. Radhakrishnan K ACS - 30614 SIRC 15 Sh. Omprakash Agrahari FCS - 6933 NIRC 34 Ms. Samriddhi Rajit Upadhyaya ACS - 30615 WIRC 16 Sh. D K Pandoh FCS - 6934 NIRC 35 Mr. Sandeep Kumar Gourishetti ACS - 30616 SIRC 17 Sh. Pravin Agrawal FCS - 6935 NIRC 36 Ms. Shivali Gupta ACS - 30617 NIRC 18 Sh. Mukesh Singh Verma FCS - 6936 NIRC 37 Mr. Muthukrishnan Ganesan ACS - 30618 SIRC 19 Sh. Rupender Dhiman FCS - 6937 NIRC 38 Mr. Vikash Pareek ACS - 30619 EIRC 20 Ms Monika Bansal FCS - 6938 NIRC 39 Mr. N Selvaraj ACS - 30620 SIRC 21 Sh. P Rajavel FCS - 6939 SIRC 40 Ms. Deepika Pasricha ACS - 30621 NIRC 41 Ms. Tannu Sharma ACS - 30622 NIRC * Admitted on 20th July, 31st July, 2012 and 13th August, 2012 42 Mr. Vikram Jhawar ACS - 30623 NIRC 43 Ms. Ruchi Kumari Sablaka ACS - 30624 EIRC

September * Admitted on 20th July, 31st July, 2012 and 13th August, 2012 2012 CHARTERED SECRETARY1186 ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 117

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44 Ms. Sulagna Goswami ACS - 30625 EIRC 102 Ms. Rajni Agarwal ACS - 30683 EIRC 45 Ms. Sanju Jaju ACS - 30626 EIRC 103 Ms. Nikita Banthia ACS - 30684 EIRC 46 Ms. Ratna Pravin Dave ACS - 30627 WIRC 104 Ms. Rajni Bafna ACS - 30685 EIRC 47 Mr. Ronak Bipin Ajmera ACS - 30628 WIRC 105 Ms. Gayathri E ACS - 30686 SIRC 48 Mr. Dhawal Doshi ACS - 30629 EIRC 106 Ms. Neha Chopra ACS - 30687 WIRC 49 Ms. Kavita Vikram Surana ACS - 30630 EIRC 107 Mrs. Shraddha Chintan Shah ACS - 30688 WIRC 50 Mr. Kancherla Dharma Rao ACS - 30631 SIRC 108 Mr. Ashok Kumar Majee ACS - 30689 EIRC 51 Mr. Anshuman Baruah ACS - 30632 EIRC 109 Ms. Khyati Dilip Raja ACS - 30690 WIRC 52 Mr. Alen Prem Wilfred Ferns ACS - 30633 WIRC 110 Ms. Yesha Rajesh Laheri ACS - 30691 WIRC 53 Mr. Arvind Bajpai ACS - 30634 EIRC 111 Mr. Kailas Walmikrao Khilari ACS - 30692 WIRC 54 Mr. Viralkumar B Mehta ACS - 30635 WIRC 112 Mr. Rahul Kumar Paliwal ACS - 30693 WIRC 55 Mr. Onkar Deepak Ghangurde ACS - 30636 WIRC 113 Ms. Trupti Kailash Sharma ACS - 30694 WIRC 56 Ms. Hetal Bharat Pandya ACS - 30637 WIRC 114 Mr. Ketan Trivedi ACS - 30695 WIRC 57 Ms. Ketki Mohan Deshpande ACS - 30638 WIRC 115 Mr. Arjit Gupta ACS - 30696 NIRC 58 Ms. Radhika Lalsen Vaiude ACS - 30639 WIRC 116 Mr. Vikas Kumar Sharma ACS - 30697 NIRC 59 Mr. Kushal Sharma ACS - 30640 WIRC 117 Ms. Shweta Agarwal ACS - 30698 NIRC 60 Ms. Nikitasha Mangal ACS - 30641 WIRC 118 Ms. Mansi Bhati ACS - 30699 NIRC 61 Ms. Kirty Shrikant Gogate ACS - 30642 WIRC 119 Mr. B Viswanath ACS - 30700 SIRC 62 Ms. Priyanka Toshniwal ACS - 30643 WIRC 120 Mr. Harshvardhan Nikhil Tarkas ACS - 30701 WIRC 63 Mr. Kulbhushan Dilip Rane ACS - 30644 WIRC 121 Mr. Ankit Bansal ACS - 30702 NIRC 64 Mr. Sandeep C. S. G. ACS - 30645 SIRC 122 Mr. Chandramouli Banerjee ACS - 30703 EIRC 65 Mr. Giriraj Joshi ACS - 30646 NIRC 123 Ms. Anushree Jayant Dehadrai ACS - 30704 WIRC 66 Ms. Rajni Miglani ACS - 30647 NIRC 124 Mr. Shreekant Jayram Sawant ACS - 30705 WIRC 67 Mr. Ankit Saxena ACS - 30648 NIRC 125 Mr. Azeem Tariq Khan ACS - 30706 WIRC 68 Mr. Ashish Omprakash Lalpuria ACS - 30649 WIRC 126 Mr. Sachin Anand ACS - 30707 NIRC 69 Mr. Ankit Misra ACS - 30650 NIRC 127 Ms. Diksha Aggarwal ACS - 30708 NIRC 70 Ms. Upma Madan ACS - 30651 NIRC 128 Ms. Reshmi Singh ACS - 30709 EIRC 71 Ms. Sheeba Ralhan ACS - 30652 NIRC 129 Ms. Mayanka Srivastava ACS - 30710 NIRC 72 Mr. Sudesh Kumar Balecha ACS - 30653 NIRC 130 Ms. Jeyasree P K ACS - 30711 SIRC 73 Mr. Kapil Bansal ACS - 30654 NIRC 131 Mr. Ravikant ACS - 30712 NIRC 74 Mr. Kirti Arora ACS - 30655 NIRC 132 Ms. Kimmy ACS - 30713 NIRC 75 Ms. Neha Sadhwani ACS - 30656 NIRC 133 Mr. Vivek Rawal ACS - 30714 WIRC 76 Mr. Rahul Kwatra ACS - 30657 NIRC 134 Ms. Iffat Fatma Hossain ACS -30715 EIRC 77 Ms. Khushboo Nanda ACS - 30658 NIRC 135 Mr. Dinmani Goswami ACS - 30716 NIRC 78 Ms. Shubhangi Mehta ACS - 30659 NIRC 136 Ms. Parul ACS - 30717 NIRC 79 Ms. Haripriya Khosla ACS - 30660 NIRC 137 Ms. Nikita Jain ACS - 30718 NIRC 80 Ms. Vandana Chokhani ACS - 30661 EIRC 138 Mr. Puneet Manawat ACS - 30719 NIRC 81 Ms. Erina Chakraborty ACS - 30662 EIRC 139 Ms. Kartika Nair ACS - 30720 SIRC 82 Ms. Soumita Ray ACS - 30663 EIRC 140 Mr. Puneet Bhandari ACS - 30721 NIRC 83 Ms. Swati Kedia ACS - 30664 EIRC 141 Ms. Anshuli Tandon ACS - 30722 NIRC 84 Ms. Sumona Das ACS - 30665 EIRC 142 Ms. Pooja Bakshi ACS - 30723 NIRC 85 Mr. Umesh Charan Pattanayak ACS - 30666 EIRC 143 Ms. Vijeta Verma ACS - 30724 NIRC 86 Ms. Riya Prasad ACS - 30667 SIRC 144 Ms. Ritika Chaudhary ACS - 30725 NIRC 87 Ms. Nisha Jajodia ACS - 30668 EIRC 145 Ms. Shivi Sharma ACS - 30726 NIRC 88 Ms. Nita Agarwal ACS - 30669 EIRC 146 Ms. Richa Gulati ACS - 30727 NIRC 89 Ms. Gagandeep Kaur Matta ACS - 30670 NIRC 147 Ms. Priyanka Luthra ACS - 30728 NIRC 90 Mr. Abhishek Sahay ACS - 30671 NIRC 148 Mr. Rachin Malik ACS - 30729 NIRC 91 Ms. Kangan Dhamija ACS - 30672 NIRC 149 Ms. Ritu Arora ACS - 30730 NIRC 92 Ms. Jasmine Kaur Matta ACS - 30673 NIRC 150 Mr. Rajveer Singh ACS - 30731 NIRC 93 Ms. Priyanka Gandhi ACS - 30674 NIRC 151 Ms. Apurva Rajendra Mehta ACS - 30732 NIRC 94 Mr. Narender Kumar ACS - 30675 NIRC 152 Ms. Bhanu ACS - 30733 NIRC 95 Ms. Shilpi Gupta ACS - 30676 NIRC 153 Ms. Anjali Kalra ACS - 30734 NIRC 96 Ms. Ayushi Khaitan ACS - 30677 NIRC 154 Mr. Ramit Chitkara ACS - 30735 NIRC 97 Ms. Kanu Priya Gupta ACS - 30678 NIRC 155 Mr. Rajesh Kumar Ajmani ACS - 30736 NIRC 98 Mr. Sourabh Parnami ACS - 30679 NIRC 156 Mr. Anurag Arora ACS - 30737 NIRC 99 Mr. Anand Kumar Chand ACS - 30680 EIRC 157 Mr. Prasanna Hegde ACS - 30738 SIRC 100 Mr. Ashwani Kumar ACS - 30681 NIRC 101 Mr. Amit Kumar Pandey ACS - 30682 NIRC September 1187 CHARTERED SECRETARY 2012 ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 118

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158 Mr. G J Ramesh Babu ACS - 30739 SIRC 6 Mr. Akash Gupta ACS - 30099 11038 NIRC 159 Mr. S Saravanan ACS - 30740 SIRC 7 Ms. Radhika Pawan 160 Mr. Akshay Pachlag ACS - 30741 SIRC Dammani ACS - 30491 11039 WIRC 161 Ms. Seethal R ACS - 30742 SIRC 8 Mr. Ram Kumar Mishra ACS - 30498 11040 NIRC 162 Mr. Sanjay Bangani V ACS - 30743 SIRC 9 Sh. Dinesh N Modi FCS - 6547 11041 WIRC 163 Ms. Krithika M ACS - 30744 SIRC 10 Sh. Rakesh Kumar 164 Ms. Kshema Patodi ACS - 30745 WIRC Shekher FCS - 6287 11042 EIRC 165 Ms. Tejal Kirti Somaiya ACS - 30746 WIRC 11 Sh. Pramod Kumar Jain FCS - 6711 11043 WIRC 166 Ms. Neha Vora ACS - 30747 WIRC 12 Ms. Damini Srivastav ACS - 27106 11044 NIRC 167 Mr. Kunjan Girishkumar 13 Ms. Sridevi B ACS - 20550 11045 SIRC Mysorewala ACS - 30748 WIRC 14 Sh. M L Birjuka FCS - 1188 11046 EIRC 168 Mr. Santi Gopal Choudhuri ACS - 30749 EIRC 15 Ms. Gouri Parshotamdas 169 Mr. Kaushik Laxman Kantak ACS - 30750 WIRC Kheskwani ACS - 28832 11047 WIRC 170 Mr. Rajeev Kumar Choudhary ACS - 30751 NIRC 16 Ms. Sudha Panwar ACS - 18338 11048 NIRC 171 Ms. Tushita Sisodia ACS - 30752 NIRC 17 Mr. Subhajit Das ACS - 28815 11049 EIRC 172 Ms. Payal Chandravadan Jani ACS - 30753 WIRC 18 Mr. Ajmal P P ACS - 28945 11050 WIRC RESTORED* 19 Sh. Rambhagat Singh 1. Mr. Abhishek Pandey ACS - 21958 WIRC Yadav ACS - 15073 11051 NIRC 2. Sh. Rajendra Jain ACS - 12348 WIRC 20 Sh. G.K. Prema Kumar FCS - 5246 11052 WIRC 3. Sh. Mahesh Chandra Bhutra ACS - 5600 NIRC 21 Ms. Sabita Khaitan ACS - 27806 11053 EIRC 4. Sh. Bharat Bhushan Jain ACS -12008 NIRC 22 Mrs. Poonam Kayal ACS - 24254 11054 SIRC 5. Ms. Sudha Gupta ACS -17726 WIRC 23 Sh. Chapalamadugu 6. Sh. Amit Ramesh Bathia FCS - 6018 WIRC Sreenivasa Rao ACS - 14723 11055 SIRC 7. Ms. Dharshini C ACS - 23874 SIRC 24 Ms. Bhagwati Agarwal ACS - 30437 11056 EIRC 8. Sh. Ramesh Kumar Rathi ACS - 16776 EIRC 25 Sh. Aishwarya Mohan 9. Ms. T Uma ACS - 11835 SIRC Gahrana FCS - 6896 11057 NIRC 10. Sh. Jitendra Mohananey ACS - 7354 NIRC 26 Ms. Sneha Shivaji 11. Sh. Sudhir Asnani ACS - 17376 NIRC Suryavanshi ACS - 30218 11058 WIRC 12. Sh. Raghvendra Singh ACS - 14860 NIRC 27 Ms. L Bharathi ACS - 29992 11059 SIRC 13. Sh. K Raghuveeran ACS - 3526 SIRC 28 Sh. Anil Bhalchandra 14. Sh. Anil Anand ACS - 10328 NIRC Kale ACS - 6058 11060 WIRC 15. Sh. Robin Banerjee ACS - 4474 WIRC 29 Sh. A K Srivastav FCS - 6909 11061 NIRC 16. Sh. V Ganesh ACS - 9912 SIRC 30 Sh. Manish Kumar Baldeva FCS - 6180 11062 WIRC 31 Sh. N R Sanyasi Rao FCS - 918 11063 SIRC CERTIFICATE OF 32 Ms. Swati Maheshwari ACS - 26060 11064 WIRC 33 Sh. Vikram Yadav ACS - 27290 11065 NIRC PRACTICE 34 Ms. Niti Saraf ACS - 27427 11066 EIRC 35 Mr. Adnan Abdullah Sl. Name ACS/FCS C P Region Ginwala ACS - 28749 11067 WIRC No. No. No. 36 Sh. L B Gopalan ACS - 22557 11068 SIRC 37 Mr. Puneet Shah ACS - 29960 11069 EIRC 38 Ms. Deepti Aggarwal ACS - 25836 11070 NIRC ISSUED** 39 Mr. Vinod Chandra 1 Mr. C Prabhakar ACS - 30433 11033 SIRC Mamgai ACS - 30118 11071 NIRC 2 Ms. Ranjita Vishnu Parab ACS - 28583 11034 WIRC 40 Mr. Ankit Jain ACS - 30154 11072 NIRC 3 Mr. Pankaj Kumar ACS - 29826 11035 NIRC 41 Mr. Agnelo Anthony 4 Mr. Vivek Kumar ACS - 30180 11036 SIRC Fernandes ACS - 30029 11073 WIRC 5 Ms. Roopa Sultania ACS - 25656 11037 NIRC 42 Ms. Kanika Gupta ACS - 24660 11074 NIRC 43 Mrs. Radhika Beria ACS - 28963 11075 EIRC * Restored from 21stJuly 2012 to 20th August, 2012 44 Ms Sweta Jain ACS - 20330 11076 EIRC ** During the month of July, 2012 45 Ms. Khyati Sharad Bhai September Mehta ACS - 30529 11077 WIRC 2012 CHARTERED SECRETARY1188 ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 119

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46 Mr. Jose George ACS - 30386 11079 SIRC 92 Ms. Nidhi Uniyal ACS - 28283 11125 NIRC 47 Ms. Jasmine Kaur Dhingra ACS - 30416 11080 NIRC 93 Ms. Venkatalakshmi 48 Mr. Amit Rathi ACS - 30354 11081 SIRC Kondri ACS - 21091 11126 SIRC 49 Mr. Manoj Kumar Sharma ACS - 27785 11082 NIRC 94 Ms. Prachi Vij ACS - 30103 11127 NIRC 50 Mr. Ananda Rao Ravada ACS - 28459 11083 SIRC 95 Mrs. Divya Shridhar 51 Sh. N. Ramanathan FCS - 6665 11084 SIRC Pai Vernekar ACS - 21620 11128 WIRC 52 Ms. Vrushali Deepak 96 Ms. Seema Chowdhury ACS - 21224 11129 Solanki ACS - 30468 11085 WIRC EIRC 53 Sh. Khan Nisar Ahmed 97 Sh Sandeep Kumar ACS - 21471 11130 NIRC Sattar ACS - 29338 11086 WIRC 98 Sh. B K Dhingra ACS - 5788 11131 NIRC 54 Ms. Sneh Mahajan ACS - 23530 11087 NIRC 99 Sh Shyam Narayan Singh ACS - 20048 11132 EIRC 55 Sh. Ajay Kumar Jain FCS - 5826 11088 NIRC 100 Ms. Himani Gupta ACS - 30175 11133 NIRC 56 Sh. Ankit Dinesh Sethi ACS - 25415 11089 WIRC 101 Ms. Vallari Rashmikant 57 Ms. Manisha Gupta ACS - 15928 11090 NIRC Patel ACS - 27244 11134 WIRC 58 Mr. Baburao Maruti 102 Ms. Mansi Goel ACS - 27044 11135 NIRC Tupare ACS - 30195 11091 WIRC 103 Ms. Mithali Gupta ACS - 27058 11136 NIRC 59 Mr. Girish Prakash 104 Ms. Shradha Poddar ACS - 22254 11137 EIRC Bhandare ACS - 30505 11092 WIRC 105 Sh. Govindaraddi Kurtakoti ACS - 23141 11138 SIRC 60 Ms. Neha Shyamlal Gupta ACS - 30523 11093 WIRC 106 Sh. Punit Santosh 61 Ms. Pornima Chandrakant Kumar Lath ACS - 26238 11139 WIRC Vidyasagar ACS - 30506 11094 WIRC 107 Ms. Reena Gupta ACS - 9851 11140 NIRC 62 Ms. Renuka Bhura ACS - 29664 11095 WIRC 108 Mr. Rahul Dattatraya 63 Ms. Latika Chawla ACS - 30554 11096 NIRC Chandratre ACS - 30607 11141 WIRC 64 Sh. Sandeep Kumar ACS - 30423 11097 NIRC 109 Sh. Surya Prakash 65 Ms. Vandana Gupta ACS - 26748 11098 NIRC Perumalla ACS - 18803 11142 SIRC 66 Ms. Kavita Pamnani FCS - 6288 11099 NIRC 110 Ms. Kajal Himatlal Mehta ACS - 30460 11143 WIRC 67 Mr. Tarlok Chand Sharma ACS - 30332 11100 WIRC 111 Ms. Reena Prakash Jain ACS - 24646 11144 WIRC 68 Ms. Priyanka Saraf ACS - 26836 11101 WIRC 112 Ms Poornima Mahadev 69 Ms. Anjali Tomar ACS - 26875 11102 NIRC Moole ACS - 19990 11145 SIRC 70 Mr. Rafeeulla Shariff ACS - 28890 11103 SIRC 113 Sh. Dinesh Kumar FCS - 4726 11146 NIRC 71 Sh. M Ramamoorthy FCS - 4814 11104 SIRC 114 Ms. Manisha Singhania ACS - 28461 11147 NIRC 72 Ms. Vibhavari Vijay Dalvi ACS - 29957 11105 WIRC 115 Sh. N V Thanigaimani FCS - 2959 11148 SIRC 73 Mr. Ajay Kumar ACS - 30343 11106 NIRC 116 Sh. Hemant Rajnikant 74 Ms. Deepali Kaushik ACS - 28761 11107 NIRC Kothari ACS - 20872 11149 WIRC 75 Ms. Anu R Nair ACS - 30525 11108 WIRC 117 Mrs. Silpi Sureka ACS - 21972 11150 EIRC 76 Ms. Jyoti Ramkishan 118 Ms. Bishakha Chakraborty ACS - 30435 11151 WIRC Prajapati ACS - 29215 11109 WIRC 77 Mr. Manoj Kumar Saxena ACS - 29643 11110 NIRC CANCELLED* 78 Ms. Khushaliben 1. Ms. Kanika Sukhija ACS - 23832 8615 NIRC Narendrakumar Shah ACS - 30401 11111 WIRC 2. Ms. Ashwini 79 Sh. Srikant Mohan FCS - 6177 11112 SIRC Sharadkumar Shah ACS - 26104 10392 WIRC 80 Sh. Srikanth Sangai ACS - 20906 11113 SIRC 3. Ms. Vidhi Vijay Doshi ACS - 22006 8122 WIRC 81 Sh. Rupesh Kumar Jain ACS - 12059 11114 WIRC 4. Ms. Arpita Bisaria ACS - 21324 10672 NIRC 82 Mr. Manisha Saboo ACS - 22148 11115 EIRC 5. Sh. Parminder Singh 83 Sh. Majeti Muniyya ACS - 8288 11116 EIRC Bakshi ACS - 25383 9139 NIRC 84 Ms. Meeta Dogra ACS - 20861 11117 NIRC 6. Ms Chhama Goel ACS - 20274 7410 NIRC 85 Ms. Seema Sharma ACS - 25258 11118 EIRC 7. Ms. Priyanka Makar ACS - 29679 10698 NIRC 86 Sh. Harish Kumar Sharma ACS - 6557 11119 NIRC 8. Mr. Rajnish Chahal ACS - 27694 10299 NIRC 87 Ms. Neha Gupta ACS - 26325 11120 NIRC 9. Mr. Jitesh Bansal ACS - 29149 11014 EIRC 88 Ms. Pragya Saxena ACS - 30366 11121 NIRC 89 Sh. V Ramanujam FCS - 2433 11122 SIRC * During the month of July, 2012 90 Sh. Ajay Kumar Siwach FCS - 6479 11123 NIRC 91 Mr. Diponkar Banerjee ACS - 28181 11124 EIRC September 1189 CHARTERED SECRETARY 2012 ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 120

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10. Sh. Bharatsinh C Parmar ACS - 20704 9116 WIRC ANNUAL MEMBERSHIP AND CERTIFICATE 11. Ms. Mamta Gupta ACS - 28794 10426 NIRC 12. Sh. K T Mayuranathan FCS - 3547 10386 SIRC OF PRACTICE FEES FOR 2012-13 13. Ms. Divya Prasad ACS - 27915 10171 SIRC The Status of payment of Annual Membership and Certificte of Practice fees 14. Ms. Meenu Jain ACS - 28777 10382 NIRC has been hosted on the web-site of the Institute. Members who have paid their Annual Membership and Certificate of Practice fee for the year 2012-13 15. Mr. Atul Vyas ACS - 27425 10304 NIRC are requested to kindly check their status on the web-site and inform the 16. Sh. Jayesh Gopal Damle ACS - 24869 9027 WIRC Institute about discrepancy, if any. In case the members find that inspite of 17. Mr. Sumit Kumar having paid the fee, their records have not been updated, they may kindly send Gururani ACS - 22421 10905 NIRC a copy of acknowledgement issued by the Institute or the particulars of the Demand Draft/Cheque amount paid and the name of the bank for proper 18. Ms. Manisha Arora ACS - 13687 9864 NIRC coordination. The information can also be provided to Meenakshi Gupta, Joint 19. Ms. Suchi Gupta ACS - 26066 9461 NIRC Director, D.D. Garg, Desk Officer or Vanitha Dhanesh, Senior Assistant on 20. Ms. Urvashi Gupta ACS - 25186 9019 SIRC telephone nos. 45341047/62/64 or over mobile no. 9868128682 or through e- 21. Ms. Sarita Bhatt ACS - 30115 10920 NIRC mail at e-mail id's [email protected],[email protected] or [email protected]. 22. Ms. Pragya Jain ACS - 20549 9469 WIRC 23. Sh. Maneck Jal Kotwal FCS - 814 11007 WIRC The names of the members who could not remit their annual membership fee 24. Ms. Neha Parbhakar ACS - 26382 9718 NIRC for the year 2012-13 by the last extended date i.e. 31st August, 2012 stand 25. Sh. Anil Kumar Chaddha FCS - 2869 3658 NIRC removed from the Register of members w.e.f. 1st September, 2012. They may however pay the fee and get their names restored by making an application in 26. Ms. Rekha Goenka ACS - 17805 6105 EIRC Form "BB' together with entrance fee of Rs. 1500/- and Rs.1000/- towards 27. Sh. Avanish Dwivedi ACS - 13983 10491 WIRC Associates and Fellow Membership respectively and restoration fee of Rs. 28. Ms. Disha Mukesh Paleja ACS - 28433 10209 WIRC 250/-. Form BB is available on the web-site of the Institute and also published else where in this issue. 29. Sh. Nitin Misra ACS - 24286 10476 NIRC In accordance with regulation 11(1)(d) as amended by the Company Secretaries (Amendment) Regulations, 2010, the members may remit the Certificate of Practice fee for the year 2012-13 on or before 30th September, LICENTIATE ICSI 2012. If the Certificate of practice fee is not paid by the said date, the Certificate will stand cancelled w.e.f. 1st October, 2012.

Sl. Name Licentiate Region The annual membership and certificate of practice fee payable is as No. No. No. follows:- 1 ] Annual Associate Membership fee Rs. 1125/- 2 ] Annual Fellow Membership fee Rs. 1500/- 3 ] Annual Certificate of Practice fee Rs. 1000/-(*) ADMITTED** * The certificate of practice fee must be accompanied by a declaration 1. Sh. Azim Naeem Khan 6390 WEST in form D duly completed in all respects and signed. The requisite 2. Ms. Deepti Datta 6391 WEST form 'D' is available on the website of Institute www.icsi.in and also 3. Sh. Somil Agarwal 6392 NORTH published elsewhere in this issue. 4. Sh. Ratishkumar MODE OF REMITTANCE OF FEE Chandubhai Patel 6393 WEST The fee can be remitted by way of : 5. Ms. Minal B Mittal 6394 WEST (i) On-Line (through payment Gateway of the Institute's web-site 6. Ms. Mudra Sitaram Dadhich 6395 WEST (www.icsi.in) ). 7. Sh. Balkrishan Agarwal 6396 EAST (ii) Credit card at the Institute's Headquarter at Lodi Road, New Delhi or Regional Offices located at Kolkata, New Delhi, 8. Sh. Piyush Sharma 6397 WEST Chennai and Mumbai. 9. Sh. Dushyanth Kumar Modhi 6398 SOUTH (iii) Cash/ local cheque drawn in favour of `The Institute of 10. Ms. Priya R S 6399 SOUTH Company Secretaries of India', payable at New Delhi at the Institute's Headquarter or Regional/ Chapter Offices located 11. Sh. Milind Dineshkumar Kotak 6400 WEST at Kolkata, New Delhi, Chennai, Mumbai and Chandigarh, 12. Sh. Rutul Hareshbhai Kansara 6401 WEST Jaipur, Bangalore, Hyderabad, Ahmedabad, Pune 13. Sh. George Thomas Kallarackal 6402 SOUTH respectively. Out Station cheques will not be accepted. However, at par cheques will be accepted . 14. Sh. Vijay Raj Singh Rathore 6403 NORTH (iv) Demand draft / Pay order drawn in favour of `The Institute of 15. Sriram C 6404 SOUTH Company Secretaries of India', payable at New Delhi (indicating on the reverse name and membership number). 16. A J Vaidyanathan 6405 EAST For queries, if any, ** During the period 01st July 2012 to 31st July, 2012 the members may please contact the Membership Section on telephone Nos.011-45341047 or Mobile No.9868128682 / through e-mail ids: September [email protected], [email protected] 2012 CHARTERED SECRETARY1190 ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 121

FORM - D APPLICATION FOR THE ISSUE/RENEWAL/RESTORATION* OF CERTIFICATE OF PRACTICE See Reg. 10, 13 & 14 To The Secretary to the Council of The Institute of Company Secretaries of India 'ICSI HOUSE', 22, Institutional Area, Lodi Road, New Delhi - 110 003

Sir, I furnish below my particulars ...... (i) Membership Number FCS/ACS: ...... (ii) Name in full: ...... (in block letters) ...... Surname ...... Name ...... (iii) Date of Birth: ...... (iv) Professional Address: ...... (v) Phone Nos. (Resi.) ...... (Off.) ...... (vi) Mobile No ...... Email id ...... (vii Additions to or change in qualifications, if any: ...... 1. Submitted for (tick whichever is applicable): (a) Issue ...... (b) Renewal ...... (c) Restoration ...... 2. (a)Particulars of Certificate of Practice issued / surrendered/Cancelled earlier

Sl. No Certificate of Practice No. Date of issue of CP Date of surrender / Cancellation of CP

3. i. I state that I am/shall be engaged in the profession of Company Secretary only on whole-time basis and not in any other profession, business, occupation or employment. I am not enrolled as an Advocate on the rolls of any Bar Council and do not hold certificate of practice from any professional body including ICAI and the ICWAI. ii. I state that as and when I cease to be in practice, I shall duly inform the Council and shall surrender forthwith the certificate of practice as required by the Company Secretaries Act, 1980, and the regulations made thereunder, as amended from time to time. iii. I hereby undertake that, I shall adhere to the mandatory ceiling of not more than eighty companies in aggregate in a calendar year in terms of the Guidelines for Issuing Compliance Certificate and Signing of Annual Return issued by the Institute on 27th November, 2007. iv. I state that I have issued / did not issue ...... advertisements during the year 20 ..... -...... in accordance with the Guidelines for Advertisement by Company Secretary in Practice issued by the Institute*. v. I state that I issued ...... Corporate Governance compliance certificates under Clause 49 of the listing agreement during the year 20 ..... -...... * vi. I state that I have / have not undertaken ...... Audits under Section 55A of the Securities and Exchange Board of India (Depositories and Participants) Regulations, 1996 during the year 20 - * vii.I state that I have / have not maintained a register of attestation/certification services rendered by me/my firm in accordance with the Guidelines for Requirement of Maintenance of a Register of Attestation/Certification Services Rendered by Practising Company Secretary/Firm of Practising Company Secretaries issued by the Institute. * 4. I send herewith Bank draft drawn on ...... Bank ...... Branch bearing No ...... for Rs ...... towards annual certificate of practice fee for the year ending 31st March ...... 5. I further declare that the particulars furnished above are true and correct.

Yours faithfully,

(Signature) Place:

Encl. Date:

* Applicable in case of renewal or restoration of Certificate of Practice

September 1191 CHARTERED SECRETARY 2012 ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 122

FORM - BB

APPLICATION FOR RESTORATION OF MEMBERSHIP

To, The Secretary to the Council of The Institute of Company Secretaries of India 'ICSI' House, 22,Institutional Area Lodi Road, New Delhi-110003

Sir,

I hereby apply for restoration of my name in the Register as an Associate/Fellow Member of the Institute of Company Secretaries Of India in accordance with the provisions contained in the Company Secretaries Act, 1980 and Regulations made thereunder and declare that I am eligible for the membership of the Institute and am not subject to any disabilities stated in the act or the Regulations of the Institute. The required particulars are furnished below: 1. Name in full : ...... (In Block Letters) Surname M. Name F. Name 2. Address (i) Professional Designation ...... Name of Company ...... Address ...... Pin Code: ...... Telephone No...... Fax ...... E -mail ...... (ii) Residential ...... Pin Code: ...... Contd. Telephone No...... Fax ...... 3. Date of admission as Associate / : ...... Fellow Member of the Institute 4. Membership Number ...... 5. I hereby undertake that if re-admitted as an Associate/Fellow Member of the Institute, I will be bounded by the Company Secretaries Act, 1980 and the Regulations made thereunder, asamended from time to time 6. I also undertake that such instances will not recur and I will make the payment of annual fee in future within the stipulated time (i.e. on or before 30th June of each year) 7. I send herewith a sum of Rs...... being the arrears of Annual Membership fee of Rs...... for the years ...... to ...... and restoration fee of Rs.250/- alongwith entrance fee (Rs. 1500/- for Associates & Rs. 1000/- for fellows) 8. I solemnly declare that what I have stated above is true and correct.

Place: Yours faithfully

Date: Signature

September 2012 CHARTERED SECRETARY1192 ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 123

News from the Institute

P. K. Credits Pvt. Ltd. 15 Months & 3500/- List of Companies 115, College Street 3 months Registered for 3rd Floor, Kolkata 70001 Practical Training Ganesham Securities Pvt. Ltd. 15 Months 3500/- Imparting 9, India Exchange Place Training Training During 8th Floor, Kolkata 700001 Bhuvneshwari Vypaar Pvt. Ltd. 15 Months 3500/- 7a, Be Ntick Street Training the Month of Kolkata 700001

July 2012 Aristro Capital Markets Pvt. Ltd. 15 Months 3500/- Bells House Training 21 Camac Street, 9th floor Kolkata - 700016 Region Training Period Stipend [email protected] (Rs.) Northern Eastern Perfetti Van Melle India Pvt. Ltd. 15 Months 3500/- Global Business Park Tower A Training Siemens Syntex Pvt. Ltd. 15 Months 3500/- 1st floor Mehrauli P-11 Chitpur Spur Training Gurgaon -122002 Kolkata 700007 [email protected] Astrum Value Homes Pvt. Ltd. 15 Months 3500/- Unit no. 1003, 10th floor Training Indostar Capital Finance Pvt. Ltd. 15 Months 3500/- Vatika city point Room no.6, 4th Floor Training M.g.road, gurgaon 122002 Commerce House [email protected] 2a Ganesh Chandra Avenue Kolkata 700013 Pearl Global Industries Limited 15 Months 3500/- 446 UD, Gurgaon- 122016 Training Gee Pee Infotech Pvt. Ltd. 15 Months 3500/- [email protected] Gee Pee House Training 34/10 Ballygunge Circular Road Varaha Infra limited 15 Months 3500/- Kolkata 700019 Umesh Smriti Training [email protected] 6 Jalam Vilas Scheme Paota 'B' Road Bhubnesh Commercial Pvt. Ltd. 15 Months 3500/- Jodhpur 342006 P-11 Chitpur Spur, Kolkata 700007 Training [email protected]

Apollo Gleneagles Hospital Ltd. 15 Months 5000/- Man Powergroup Sevices 15 Months 7000/- 58 Canal Circular Road Training India Pvt. Ltd. Training Kolkata 700054 Global Business Park [email protected] Tower A 6th Floor M.G. Road, Gurgaon 122002 Apex Auto Limited 15 Months 3500/- M-1,2,3,20 Phase VII Training Raindrop Financial 15 Months 3500/- Industrial Area, Adityapur Services Pvt. Ltd. Training Jamshedpur-832109 308, Lusa Tower, Azadpur Delhi -110033 Shree Hari Agro Industries Limited 15 Months 3500/- 45a Addya Sradhya Ghat Road Training Arcelor Mittal India Limited 15 Months 3500/- 3rd Floor, Room No. 1 Uppal M-6 Plaza, unit C to F Training Kolkata, West bengal 700007 Jasola District Centre New Delhi 110025 Company law board 15 Months 3500/- [email protected] Kolkata Bennch Training 9 Old Post Office Street Honda Motor India Pvt Ltd. 15 Months 3500/- 6th Floor Kolkata-700 001 Plot no. A-1, Sector 40/41 Training [email protected] Surajpur Kasna Road, Greater Noida Distt. Gautam Budh Nagar Shree Sidhi Binayak 15 Months 3500/- U.P. 201306 Holdings Pvt. Ltd. Training 115, College Street, 3rd Floor Kolkata 700012 September 1193 CHARTERED SECRETARY 2012 ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 124

News from the Institute

Zamil Infra Pvt Ltd. 15 Months 3500/- Arise India Limited 15 Months 3500/- 002 & 003, BPTB Park Centra Training B 38 Jain Chowk Main Road Training Gurgaon 122001 Palam, New Delhi-110045 Haryana [email protected]

Qutrro FPO Solutions Pvt. Ltd. 15 Months 3500/- Gee EL Woolens Limited 15 Months 3500/- 267 udyog vihar, Phase-II Training H 35 Sainik Farms Training Gurgaon, Haryana-122015 New Delhi-110062 [email protected] [email protected]

Wital See Marketing Limited 15 Months 3500/- Prints Industries Limited 15 Months 3500/- Sco No.224-225,1st Floor Training 123 A DDA Office Complex Training Sector 40 D, Chandigarh 160036 Cycle Market Jhandelwalan Extn. [email protected] New Delhi-110055 [email protected] Vatika Limited 15 Months 3500/- Vatika Triangle, 7th Floor Training India Yamaha Motor Pvt Ltd. 15 Months 3500/- Sushant Lok, phase - I 1st Floor The Great Eastern Centre Training M. G. Road, Gurgaon - 122002 70 Nehru Place [email protected] New Delhi-110019

Karnani Solvex Pvt. Ltd. 15 Months 3500/- B P F Industries Limited 15 Months 4000/- M-8 Mahesh Colony, Training Village bhamain kalan Training Tonk Phatak, Jaipur-302015 Taipur road, Ludhiana - 141011 [email protected] [email protected]

GMR Airports Limited 15 Months & 3500/- Hindustan Insecticides Limited 15 Months 3500/- New udaan bhawan 3 Months Scope Complex Code 6 Training Opp terminal 3 Practical Training 2nd Floor 7 Lodi Road Indira gandhi international airport New Delhi-110003 New delhi 110037 [email protected] [email protected] General Motors India Pvt. Ltd. 15 Months & 3500/- Vatika Hotels Pvt. Ltd. 15 Months 3500/- Plot no 15, Sec 32 3 Months Vatika Vriangle, 7th floor Training Institutional Area Practical Training Sushant Lok, Phase I, Gurgaon -122001 Block A, Mehrauli Gurgaon Road, Gurgaon 122002 Neelam Portfolio Ltd. 15 Months 3500/- 801-802, Vishwa Sadan Building Training National Skill 15 Months & 3500/- District Centre, Janakpuri Development Corporation 3 Months New Delhi -110058 D-4, Clarion Collection Practical Training [email protected] Shaheed Jeet Singh Marg. New Delhi-110016 Nec HCL System Technologies Ltd. 15 Months 3500/- 4th Floor, Tower 'B' Logix Training Vikas WSP Limited 15 Months 4000/- Tecno Park, Plot No. 5, Sec-127 B-86/87 Udyog Vihar Training Noida -201301 RIICO Industrial Area, www.nechcist.in Sriganganagar 335002 [email protected] Southern

Jointeca Education Solutions Ltd. 15 Months 2500/- Katra Phytochem (India) Pvt Ltd. 15 Months 3500/- 1014, Jointeca Campus, Training 1134, First Floor, 100 FT.Road, Training Chowki Bagh Bahadur Hal 2nd Stage, Colony, Near SBI Crossing, Bangalore 560008 Mathura -281001 [email protected]

Alchemist limited 15 Months 10000/- Company Law Board 15 Months 3500/- Alchemist House Training Chennai Bench Training Building No.23 Nehru Place Corporate Bhawan New Delhi-110019 (Uti Building ) 3rd Floor No.29 Rajaji Salari Chennai-600001 September [email protected] 2012 CHARTERED SECRETARY1194 ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 125

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KMC Speciality Hospital (I) Ltd. 15 Months 5000/- Lesha Industries Limited 15 Months 3500/- 6 Royal Road Training 7th Floor, Ashoka Chambers Training Trichy 620001 Mithakhali Six Roads, [email protected] Ahmedabad [email protected] Gradiente Infotainment Limited 15 Months 3500/- 306, 3rd Floor, Mayfair Gardens Training Vakksh Commodities 15 Months 3500/- Banjara Hills , Road No.12 Company Pvt Ltd. Training Hyderabad 500034 145 Mittal Tower [email protected] C Wing, Nariman Point Hospira Healthcare India Pvt.Ltd. 15 Months 5000/- Mumbai 400021 9th Floor, Orchid Towers, Training [email protected] 313, Valluvar Kottam High Road, Nungambakkam In-Solutions Global Pvt. Ltd. 15 Months 3500/- Chennai 600034 Suite #21 1st Floor, Rna Arcade Training Lokhandwala Stanadyne Amalgamations Pvt. Ltd. 15 Months 5000/- Andheri(W) No.96, Aranvoyal Village, Training Mumbai 400053 Thiruvallur Taluk [email protected] Thiruvallur,Tamil Nadu [email protected] Shrikrishna Devecon Limited 15 Months 3500/- Umarji House, 2nd Floor Training Rane (Madras) Limited 3 Months 3500/- 202 Teli Gally Maithri, 132 Practical Training Andheri East Cathedral Road Mumbai 400069 Chennai 600086 [email protected]

Biocon Limited 3 Months 3500/- Power Build Limited 15 Months 3500/- 20th Km Hosur Road Practical Training Anand Anand Sojitra Road, Training Electronics City Bangalore Vallabh Vidyanagar - 388120 Bangalore -560100 Gujarat. [email protected] [email protected]

Western Shri C.V. Sajeevan, B.O. 15 Months 3500/- Company Law Board Training The Fourcee Port & 15 Months & 3500/- Mumbai Bench N.T.C. House Terminal Pvt. Ltd. 3 Months 2nd Floor, 15 329, Laxmi Industrial Estate Practical Training Narottam Morarjee Marg New Link Road, Ballard Estate Andheri (W) Mumbai-400038 Mumbai 400053 [email protected]

M Power Micro Finance Pvt Ltd. 15 Months 3500/- Destimoney Securities Pvt. Ltd. 15 Months 3500/- 3, 1st Floor, Sai Santosh Complex Training Tech Web Center, 6th Floor, Training Hari Nagar, New Link Road, Gotri Road, Oshiwara, Behram Baug, Vadodara 390021 Jogeshwari(West) [email protected] Mumbai 400102

Facor Steels Limited 15 Months 3500/- Pramerica Asset Managers Pvt. Ltd. 15 Months 3500/- 46 A & B Midc Training 2nd Floor, Nirlon House, Training Industrial Estate Dr. A.B.Road, Hingna Road, Worli Nagpur 440028 Mumbai 400030 [email protected] [email protected]

Sunteek Wealthmax 15 Months 3500/- Ramkrishna Electricals Limited 15 Months & 3500/- Capital Pvt.Ltd. Training N-5 , M.I.D.C. 3 Months 5th Floor, Sunteck Centre Nagpur 440016 Practical Training 37-40 Subhash Road, [email protected] Vile Parle (East) Mumbai 400057 [email protected] September 1195 CHARTERED SECRETARY 2012 ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 126

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Oberoi Realty Limited 15 Months & 3500/- MS. SUJATHA DEVINENI PCSA -3041 Commerz, 3rd Floor, International 3 Months Company Secretary In Practice Business Park, Practical Training Flat No. 3, 1st Floor Oberoi Garden City, Master Sai Apartments Off Western Express Highway, Sangeethnagar Goregaon (East) Somajiguda, Hyderabad Mumbai-400 063 Andhra Pradesh -500 082 Meghmani Organics Limited 15 Months 3500/- MR. V.K. SHANKARARAMANN PCSA -3042 Meghmani House, Training Company Secretary In Practice Shree Nivas Society,Paldi, Ahmedabad 380007 Flat Ff2/First Floor, No 95/5 Avm Colony [email protected] 3rd Street, Virugambakkam Chennai -600 092 Central Cables Ltd 15 Months & 3500/- 5 Temple Road, Civil Lines 3 Months MS. NISHA UCHIL PCSA -3043 Nagpur -440001 Practical Training Company Secretary In Practice [email protected] Shop No. -4b, Harshvardan Chs Ghanshyam Gupte Road 3rd Cross Lane List of Practising Dombivli (West) 421 202 Members Registered for MR. MANISH RAKESH PCSA -3044 Company Secretary In Practice the Purpose of Dg -3, 3rd Floor 212, Vikash Puri Imparting Training New Delhi -110 018 During the Month MR. CHANDI PRASANNA JENA PCSA -3045 Company Secretary In Practice of July, 2012 24, Chowringhee Road, 1st Floor Kolkata - 700 087

MS. SMITA JHAWAR PCSA -3046 MR. TRILOK CHAND GARG PCSA -3036 Company Secretary In Practice Company Secretary In Practice 1/1, Raja Rajendralal Mitra Road Rz-108, Indra Park, Uttam Nagar East Suit DF-LC, Kolkata - 700 085 Delhi -110 059 MS. SWATI SINGHAL PCSA -3047 MS. MEENAKSHI SUDAN PCSA -3037 Company Secretary In Practice Company Secretary In Practice B-591, Weavers Colony 14/6, L.G. Floor, Kalkaji Ashok Vihar, Phase- IV Near Deshbandhu College New Delhi -110 052 New Delhi -110 019 MR. PIYUSH ASHOK KUMAR GOHIL PCSA -3048 MS. PRIYANKA GOEL PCSA -3038 Company Secretary In Practice Company Secretary In Practice Room No. -2 F-31/32, Sadh Nagar, Gali No.-8, Palam Colony, New Delhi -110 045 House No. - 2, 1st Floor Near Little Flower Hhigh School MS. MONIKA SINGHAL PCSA -3039 Kamgar Road Company Secretary In Practice Andheri (East) 20, Road No.-23, East Punjabi Marg Mumbai- 400 069 New Delhi -110 026 MR. VIVEK KUMAR PCSA -3049 MS. ABHA MEHTA PCSA -3040 Company Secretary In Practice Company Secretary In Practice 34/68, D, 2nd Floor 309, Lucky Plaza Gladson Center Malviya Nagar NH Bye Pass Bhopal -462 003 Edapally, Ernakulam Kerala- 682 024 September 2012 CHARTERED SECRETARY1196 ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 127

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MR. P.V. SUBRAMANIAN PCSA -3050 MR. DINESHKUMAR GOVINDBHAI BHIMANI PCSA -3061 Company Secretary In Practice Company Secretary In Practice "Sampriti", 3rd Floor 207, Nathvani Chambers, Sardar Gunj 81/8, Regent Estate Nr.Patel Market Kolkata - 700 092 Anand -388 001

MS. SUPRIYA SETHIA PCSA -3051 MS. ANKITA JAIN PCSA -3062 Company Secretary In Practice Company Secretary In Practice 18, Giri Babu Lane, 1st Floor Kolkata -700 012 605, Udai Path Vivek Vihar MR. ASHWINI KOHLI PCSA -3052 Shyam Nagar, Sodala Company Secretary In Practice Jaipur -302 019 A-84, Vivek Vihar - 1, Delhi -110 095 MS. KIRTI GUPTA PCSA -3063 MR. VIVEK SHARMA PCSA -3053 Company Secretary In Practice Company Secretary In Practice B-34, Tagore Road G-30/392, Sector -3 Adarsh Nagar Rohini , Delhi -110 085 Delhi -110 033 MR. HRISHIKESH RAJHANSA PCSA -3054 MS. NEHA JAIN PCSA -3064 Company Secretary In Practice Flat No-9, Navshantiban Apartments Company Secretary In Practice 1134 / 2, Off. F.C. Road 53/10/3, Bon Behari Bose Road Shivaji Nagar, Pune - 411 016 1st Floor, Howrah -711 101

MR. RABINDRA DUGAR PCSA -3055 MS. BHAVNA V. DEDHIA PCSA -3065 Company Secretary In Practice Company Secretary In Practice 66/1, Arabinda Road 5, Gayatri Krupa Salkia, Howrah - 711 106 N.S. Road, Opp. Police Stn. Mulund (W), Mumbai -400 080 MS. ANJALI KABRA PCSA -3056 Company Secretary In Practice MS. LABDHI H. SHAH PCSA -3066 414, Manas Bhawan Extension Company Secretary In Practice 11, R.N.T.Marg Indore -452 001 C/O Mehul Agency, Paiga Street, Khatriwad, Navsari - 396 445 MR. K.M.A.NARAYANA SWAMI PCSA -3057 Company Secretary In Practice MR. VINOD CHANDRA MAMGAI PCSA -3067 #28-10-3/2, 2nd Floor, Company Secretary In Practice Nagamali Paradise Office No-201, 48 Suryabagh West Guru Angad Nagar Visakhapatnam - 530 020 Gurudwara Road, Laxmi Nagar New Delhi -110 092 MS. NEETU GARKHEL PCSA -3058 Company Secretary In Practice MR. PRAVIN KUMAR CHHAJER PCSA -3068 Wig -043, Wellington Dcf Phase - V Company Secretary In Practice Gurgaon -122 009 204, Haribal Roy Market MS. MEENAL HEMANT ABHYANKAR PCSA -3059 Nr. Saraf Buuilding Company Secretary In Practice A.T. Road, Guwahati -781 001 Plot No. -3, 101, Parag Apt., Padmarekha Soc, Karvenagar MR. SULEMAN DAUD BARGIR PCSA -3069 Pune -411 052 Company Secretary In Practice 2/26, Blossom Chs MR. KASHIF ALI PCSA -3060 Military Road Marol Company Secretary In Practice Andheri (E) Ngc,M-79, 1st Floor Mumbai -400 059 M-Block Market, Greater Kailash -Ii New Delhi -110 048 September 1197 CHARTERED SECRETARY 2012 ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 128

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Company Secretaries Benevolent Fund

MEMBERS ENROLLED REGIONWISE AS LIFE MEMBERS OF THE COMPANY SECRETARIES BENEVOLENT FUND*

Sl. LM Name Mem City Sl. LM Name Mem City No. No. No. No. No. No.

NIRC 8 9805 Ms. G Haritha FCS - 5521 BANGALORE 1 9800 Sh. Anubhav Lamba ACS - 21973 JAIPUR 9 9807 Ms. Varsha Patil ACS - 30472 HYDERABAD 2 9801 Sh. Vishal Mehan ACS - 23913 DELHI 10 9808 Sh. Rajeeva Prakash 3 9804 Mr. Nitin Rawat ACS - 28809 FARIDABAD Narayanan ACS - 7329 CHENNAI 4 9812 Ms. Meenakshi Anchlia ACS - 30545 BHILWARA 11 9809 Mr. Muthukrishnan Ganesan ACS - 30618 CHENNAI 5 9814 Mr. Deepak Mangal ACS - 30380 NEEM KA THANA 12 9811 Mr. Narain Ka SIRC Raamkumar ACS - 30593 CHENNAI 6 9802 Mr. Suryanarayanan S ACS - 30587 TIRUMANGALAM WIRC 7 9803 Sh. S Venkat Ramana 13 9806 Sh. Shripad Ramchandra Reddy ACS - 14143 SECUNDERABAD Halbe FCS - 633 MUMBAI 14 9810 Sh. Himanshu Laxmikant

* During the period 21st july 2012 to 20th August 2012 Nadiyana ACS - 26939 JUNAGADH September 15 9813 Ms. Kala Anand Agarwal FCS - 5976 MUMBAI 2012 CHARTERED SECRETARY1198 ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 130

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including classical dance, live drama, modern dance etc., which was appreciated by all. CS Ranjeet Kr. Kanodia in his address appreciated News From the the efforts given by all the participants in such a short span of time. Kanodia also stated that he is looking forward to organize such kind of cultural session in future to encourage members and students at large. Regions The participants were presented by a memento for their participation. Career Awareness Programme A career awareness programme was conducted at Kendriya Eastern India Vidyalaya Kharagpur 2, by S.Sreejesh, Desk Officer (Career Awareness) where he gave an insight to the class XII students on "Career as a Company Secretary". The programmes were also held Regional Council Gokhale Memorial School, Sailendra Sircar Vidyalaya, A K Ghosh Sr. Sec. School, Deshapran Birendra Nath Institution (Boys), Milangarh 32nd AGM Balika Vidyalaya, Tollygunge Ashok Nagar Vidyapith, Khalsa English On the occasion of the 32nd Annual General Meeting of the EIRC High School, La Martiniere Boys School, St. Joseph and Mary's of the ICSI, CS Ranjeet Kanodia, Chairman, ICSI EIRC put forward School where a presentation was given on "Career as a Company before the members the following agenda item `to consider the Secretary" and the AV clip on the Company secretary course was Income & Expenditure Account for the year ended 31st March, also shown to the students of the respective schools. The speakers 2012 and the Balance Sheet as on that date together with the were informed about the ICSI Students Education Fund, the fee Auditors' Report and the Annual Report of ICSI-EIRC for the year concession to reserved classes, ICSI E-Learning and the flexibility of and also to appoint Auditors for the year 2012-2013 and to fix their the CS course to study wherever a student wants to. The students remuneration.' The resolution was passed unanimously. Chairman, and the teachers of the school were inquisitive about the CS course ICSI EIRC thereafter briefed the members about the various like the time period of the course, the fee structure, the contents, the programmes/meetings organised and other activities undertaken opportunities after becoming a CS professional, etc. by the ICSI-EIRC during the last six months. He also highlighted the new initiatives taken by the ICSI-EIRC and its future plan. The BHUBANESWAR CHAPTER Chairman also urged upon the members to take part in EIRC's Full day Seminar activities and provide support in its endeavours. The members On 28.6.2012, Bhubaneswar Chapter of EIRC of the ICSI jointly present appreciated the initiatives taken by EIRC and thanked with Department of Public Enterprise, Govt. of Odisha organized a Chairman, Vice-Chairperson and Secretary for their unstinted full day seminar for the Directors of State PSUs at Bhubaneswar. efforts to make all the events successful. P.C. Ghadai, Hon'ble Minister Finance & P.E., Odisha inaugurated the seminar. While Jugal Kishore Mohapatra, IAS, Principal Independence Day Celebration Secretary to Govt., Department of Finance and A.K. Tripathy, IAS, On 15.8.2012 the EIRC of the ICSI celebrated the Independence Principal Secretary, Department of P.E & Tourism, Odisha and CS Day at its Building. CS Ranjeet Kanodia, Chairman, ICSI-EIRC N.K. Jain, Secretary & CEO, the ICSI attended the seminar as the hoisted the National Flag followed by National Anthem in the Guest of Honour. CS Sutanu Sinha, Senior Director, the ICSI, CS presence of, EIRC Council Members, Members of the Institute, Vijaya Batth, Practising CA & CS Prashant Panda, Company Students and EIRO officials. Secretary & Legal Head, Aircel, Bhubaneswar addressed the CS Ranjeet Kanodia said that freedom has come at a huge cost seminar as the speakers of the programme. and it is our ardent duty that everyone should put in their bit and CS N.K. Jain made a live presentation during the inaugural session work hard unitedly and untiringly for the cause of Country's growth of the programme, CS Sutanu Sinha, CS Vijaya Batth, Practising and development. A colorful cultural programme comprising CA & CS Prashant Panda made presentations during the technical patriotic songs and dance were performed by a professional troupe. sessions of the programme. Earlier, CS J.B. Das, Chapter Chairman presented key note address of the programme. Foundation Day Celebration P.C. Ghadai, J.K. Mohapatra and A.K. Tripathy applauded the efforts On 31.7.2012 the EIRC of the ICSI celebrated its Foundation Day. The of the ICSI, Bhubaneswar Chapter for its initiative in organizing such programme was attended by dignitaries and eminent members of the a programme which is second programme by both the ICSI & Deptt. Institute. B.L. Mittal, Chairman & Managing Director of Microsec, was the of P.E, Odisha and hoped that this seminar will definitely provide Chief Guest on the occasion. B.L. Mittal in his presentation focused on impetus and qualitative training to the Directors of all the PSUs in various topics like green initiative, stress management, creation of Odisha while discharging various responsibilities in their business ideas and other motivational thoughts. organisations. They also assured the ICSI for providing support to Members and students also presented a short cultural programme the students of Odisha pursuing the CS course and that the Govt. of September Odisha will provide support to the ICSI as and when required. They 2012 CHARTERED SECRETARY 1200 ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 131

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also sought suggestion from the ICSI for further improvement in the Independence Day of the Nation at its office premises amidst the Corporate Governance Manual of the Govt. of Odisha in near future. presence of the Office Bearers of the Managing Committee, Chairman, Managing Directors, other Directors of about 20 State Members of the Chapter, Faculty of Oral tuition classes, students, PSUs and Senior Officers of P.E. & Finance Department, Govt. of others and staff members. Odisha and other Sectors attended the programme. After the CS J.B. Das, Chapter Chairman unfurled the tri-colour followed by conclusion of the programme most of the delegates gave feedback rendition of National Song and National Anthem. Members, for organizing such programmes in every six months for updation. faculties, students present on the occasion addressed during the Interactive session programme. HOOGHLY CHAPTER On 28.6.2012, the Chapter arranged an interactive meeting of the Secretary & CEO, the ICSI with P.C. Ghadai, Hon'ble Minister, Half-day Workshop Finance, Odisha at Bhubaneswar. J.K. Mohapatra, IAS, Principal On 21.7.2012 the Hooghly Chapter of EIRC of the ICSI organized Secretary, Finance, Odisha was also present on the occasion. CS a half-day Workshop on e-Voting & Recent Changes in Company N.K. Jain, Secretary & CEO, the ICSI apprised the Hon'ble Minister Law at Silver Jet Cruise on Hooghly River. This was first ever and the Principal Secretary, Finance, Odisha about the ICSI and its workshop organized on cruise running on deep waters of Hooghly role & function. Further he apprised the role played by the members River. Dr Navrang Saini, Regional Director (Eastern Region), both in employment and in practice. He also apprised about Ministry of Corporate Affairs graced the occasion as Chief Guest. appearance of members of the ICSI before the various State VAT He in his interactive and lively session with the delegates discussed laws and sought support from both the dignitaries as well as the the recent changes in the Company Law. Govt. of Odisha for recognition of the Company Secretaries for Moloy Biswas (Manager) and Rudra Prasad Dutta, Asst. Manager, appearing before Odisha VAT laws. CS Sutanu Sinha, Senior Central Depository Services (I) Limited discussed the importance Director, the ICSI was also present during the interactive session. and use of e-Voting. Biswas said that e-voting facilitates voting on resolutions of companies in a fair and transparent manner for all Evening talk on GST, Goods & Service classes of security/stakeholders. It enables the security holders to Tax and Companies Bill, 2011 vote at a time and place of their convenience. Prashant Jha, On 1.8.2012 the Chapter organized an evening talk on Goods & Executive-IPF of Bombay Stock Exchange Limited discussed the Service Tax and Companies Bill, 2011 wherein CS Jyoti Bhusan SME Exchange. CS Manisha Saraf, Chapter Secretary coordinated Das, Secretary, the Odisha Mining Corporation and CS Prashant the programme. Around 90 delegates attended the programme. Panda, Head (Secretarial), AIRCEL, Bhubaneswar addressed the The delegates enjoyed the session and the ride on cruise, both. members of the Chapter. CS Jyoti Bhusan Das stated that GST is in the evolving stage & is Career Awareness Programmes expected to be fine tuned in the Parliament once it is put to motion. On 30.7.2012 two sessions of Career Awareness were organized However, this tax when implemented will go a long way in at the Agrasen Balika Siksha Sadan, Liluah. In a discussion with rationalizing the system and reduced burden on the consumer the students of Class XI and XII, CS Gautam Dugar, Chapter besides uniform tax regime across the country. Chairman stated the prospects of the profession. Alok Kumar, In his address, CS Prashant Panda pointed out the important Chapter Official informed the students about the fee structure and provisions of the Bill and role of Company Secretary professionals. examination pattern. The students present showed keen interest in The speakers made PowerPoint presentations. the CS course and raised many pertinent queries which were ably Members present raised a number of queries on the topics which replied by CS Dugar. were ably replied by the speakers. Around 50 members of the On 7.8.2012 two sessions of Career Awareness were organized at Chapter attended the programme. the Rishra Swatantra Vidyalaya at Rishra and a session was held at Mahesh Shri Ram Krishna Ashram Vidyalaya at Rishra. Alok Donation to Bhubaneswar Chapter Kumar discussed the role and prospect of the profession of CS, fee On 02.8.2012, the Odisha Mining Corporation Limited (A Gold structure and examination pattern with the students present. category State PSUs), Bhubaneswar donated a sum of Rs. 30.00 lakhs to the Bhubaneswar Chapter for construction of 3rd floor of its NORTH EASTERN CHAPTER Building. The cheque was handed over to the Chairman of the Annual General Meeting Chapter. The Managing Committee of the Chapter places on record On 27.7.2012 the Annual General Meeting of NE Chapter of EIRC the contribution and support received from M/s. the OMC Ltd, of the ICSI for the year 2012 was held at Guwahati. Twenty Bhubaneswar. Members participated in the Annual General Meeting. The AGM adopted the Audited Accounts along with the Auditor's Report and Celebration of 66th Independence Annual Report of NE Chapter for the Financial year ended Day of the Nation 31.3.2012. the AGM also unanimously decided to re-appoint On 15.08.2012, Bhubaneswar Chapter celebrated 66th September 1201 CHARTERED SECRETARY 2012 ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 132

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'Vikash Jain & Associates Chartered Accountants" as Statutory Celebration - Flag Hoisting & Plantation of Saplings and Auditors of North Eastern Chapter of EIRC of ICSI for the Financial Inauguration of newly renovated Library Reading Room. CS Nesar year 2012-13 and to re-appoint 'Sandeep S. Sharma & Co.', Ahmad, President, the ICSI was the Chief Guest. Chartered Accountants, as Internal Auditors of North Eastern Chapter of EIRC of ICSI for all the quarters of Financial Year 2012- Two Day Capacity Building Workshop 13 (subject to the approval of EIRC of the ICSI). for Practising Company Secretaries On 18 and 19.8.2012 a Two Day Capacity Building Workshop for Career Awareness Programmes Practising Company Secretaries was organised by the Regional The North Eastern Chapter of EIRC of the ICSI organized two Council. The speakers were CS Nesar Ahmad, CS Rajiv Bajaj, CS Career Awareness Programmes in the month of July 2012. On Ajay Garg, Ravindra Vadali, CS Harish K. Vaid, CS Atul H. Mehta 6.7.2012 the Career Awareness Programme was held at Moran and CS Vikas Khare. Commerce College, Dibrugarh Dist, Assam. The speakers were CS Amit Kr. Periwal and S. Baruah, Principal of Moran Commerce Vaishali Study Circle Meeting College. Forty students attended the programme. On 14.7.2012 the Regional Council organized Vaishali Study Circle On 7.7.2012 the Career Awareness Programme was held at Moran Meeting on Recent Developments in Limited Liability Partnership Commerce College, Sivsagar Dist, Assam. The speakers were CS Act and its Administration. B. Srikumar, Assistant Registrar, LLP Amit Kr. Periwal and A.K. Saikia, Principal of Moran Commerce was the speaker. College. Fifty-five students attended the programme. South Zone Study Group Meeting Study Circle Meeting on Service Tax under Negative On 27.7.2012 the Chapter conducted a Study Circle Meeting cum List Regime Professional Development programme at Guwahati on Critical On 20.7.2012 the Regional Council organized the South Zone Analysis on NEIIPP Policy. The Chief Guest and Speaker was CA Study Group Meeting on Service Tax under Negative List Regime. Vivek Jalan, Practising Chartered Accountant, Guwahati. Jalan CA Vikas Khandelwal, Partner, Vikas Khandelwal & Company, explained the gathering with power point presentation the benefits Chartered Accountants was the speaker. under North East Industrial Investment Promotion Policy (NEIIPP), West Zone Study Group Meeting on 2007 to new and existing industries. He explained in detail the types of subsidies, the key points for claiming subsidy under Key IPO Regulations NEIIPP Policy 2007, the excise benefits to industries in the Region, On 21.7.2012 NIRC organized West Zone Study Group Meeting on the Fiscal Benefits under Industrial State Policy. He also highlights Key IPO Regulations. Manoj Kumar, ABV Corporate Professional the State Policy regarding Power Subsidy, Subsidy on Quality was the speaker. Certification, Subsidy on drawal of Power Line, VAT Exemption and North Zone Study Group Meeting on Special Incentives for Mega Projects. During the Question-Answers session that followed, several XBRL- Future Challenges participants raised various queries pertaining to 'NEIIPP Policy On 22.7.2012 the Regional Council organised North Zone Study 2007' which were satisfactorily replied by the speaker and the Group Meeting on XBRL- Future Challenges. Ankit Varshney, Office Bearers of NE Chapter. The interactions were marked with Webtel Electrosoft Ltd. was the speaker. overwhelming response. Around seventy members including 165th Management Skills Orientation students attended the study circle meeting. Programme (MSOP) On 12.7.2012 the Inauguration of 165th Management Skills Northern India Orientation Programme (MSOP) conducted by the Regional Council was organized. CS Anoop Kapoor, Finance Coordinator cum Company Secretary, BHP Billiton India was the speaker. Regional Council On 29.7.2012 at the valedictory session CS O P Dani, Past President was the Chief Guest who in his address gave certain tips Independence Day Celebration- Flag to be followed for becoming successful in life. He also informed the Hoisting & Plantation of Saplings and students about Sri Aurobindo Foundation for Integral Management Inauguration of newly renovated (SAFIM) & its activities. The MSOP completion Certificates were Library Reading Room issued by the Chief Guest and President, the ICSI. On 15.8.2012 the regional Council organised Independence Day Sports Meet for Members On 22.7.2012 the NIRC-ICSI organised a Sports Meet for Members September at Chilla Sports Complex, New Delhi. Activities like Carrom, Chess, 2012 CHARTERED SECRETARY 1202 ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 133

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Badminton, Table Tennis, etc. were arranged during the sports meet. Drawing competition for children of different age groups and Study Circle Meeting also Tambola & Musical Chair for ladies & other members were the On 27.7.2012 the NIRC-ICSI organized a Study Circle Meeting on special attraction of the event. Around 50 members present on the Legal Metrology & Packaged Commodity Rules at New Delhi. CS occasion enjoyed the Meet thoroughly. The team comprising CS Devinder Kumar Jain, Company Secretary, McDonalds was the Rakesh Arora and CS Rohit Kashyap were adjudged as the Guest Speaker on the occasion. Around 70 members attended the winners team in Badminton and CS Rajesh Rath and CS Vinod meeting. Sharma were adjudged as the Runners Up team. Seminar on Corporate Financial Foundation Day Celebration Restructuring - Innovations and On 23.7.2012 the NIRC-ICSI inaugurated its 41st Foundation Day Celebrations and also the newly renovated NIRC Office. CS Sanjay Opportunities Kumar Jain, IPS, Deputy Commissioner Police, Delhi was the Chief On 28.7.2012 NIRC-ICSI organised a seminar on Corporate Guest on the occasion. The dignitaries present including the Chief Financial Restructuring - Innovations & Opportunities at New Delhi. Guest, Chairman, Immediate Past Chairman, Treasurer of the Regional Y K Gaiha, IRS, Member, BIFR was the Chief Guest. S P Arora, Council, other Members of the regional council, etc. inaugurated the Managing Director, IFCI Venture Capital Funds Ltd. was the Guest Foundation Day Celebrations. CS Rajiv Bajaj, in his welcome address of Honour. Around 350 members were present on the occasion. said that Foundation Day is a special day for everybody. He intimated Inaugural Session: CS NPS Chawla, Treasurer of the Regional various programmes being organised by NIRC during the celebrations Council anchored the inaugural session of the seminar. He in his and invited all to participate in the programmes. welcome address mentioned that various big corporate houses CS Sanjay Kumar Jain in his address said that Foundation Day is have been through financial sickness and they all come out the right occasion to recall the pledges made by all of us. He because of financial restructuring. He gave the theme introduction mentioned that the success of any profession depends upon the of the seminar and briefly informed the entire coverage of the quality of services being rendered by its members. Lot of openings seminar. and responsibilities are on the shoulder of a professional. He gave CS Rajiv Bajaj, Chairman, Regional Council while giving his few suggestions to be successful viz. positive attitude, impartiality, welcome address mentioned that at the time of coining the theme etc. Lastly he mentioned about the responsibility of paying back to of the seminar after a big debate it was decided to hold a seminar the society at large and also offered his best wishes. on Corporate Financial Restructuring and try to cover the After the inaugural session saplings were planted in the NIRC untouched areas like funding, sources of funding, Corporate Debt premises by the Chief Guest & dignitaries present on the occasion. Restructuring, One Time Settlement etc. where opportunities can The newly renovated NIRC office was also inaugurated by the Chief be explored by our professionals. Guest, Chairman & other dignitaries present. Ashok Chordia, Mentor Capital Services Pvt. Ltd. Presented the Key-note address. While addressing the gathering he mentioned Thereafter a Motivational Talk for the students was organized by about the reasons of Financial Stress viz. bad management, NIRC-ICSI. Ravish Bhateja, Corporate Trainer & Faculty Member external sources, internal sources, policy etc. some of these may was the Guest Speaker and the talk was attended by around 75 require restructuring and some may not. The need for Financial students. Restructuring is very important for sustenance of the corporates. Meeting with Corporate He informed that Reserve Bank of India formed a mechanism of Corporate Debt Restructuring which is one of the ways of Financial Mentors of NIRC Restructuring. Equity Restructuring, Business Restructuring are the On 24.7.2012, NIRC-ICSI organized a Meeting with Corporate other ways of Financial Restructuring. Mentors of NIRC at India International Centre, New Delhi. The CS S P Arora while addressing the gathering mentioned that these senior members present gave very valuable suggestions which days banks have become proactive. Earlier in case of delayed were suitably noted by the Chairman. payments no action was taken but now India has adopted International laws and now if the payment is not received in 90 days Members' Quiz on Corporate Laws it will be declared as Non Performing Asset. As per RBI Guidelines On 25.7.2012 NIRC-ICSI organized Members' Quiz on Corporate & Basel III norms increase in NPAs affect the Balance Sheet of any Laws at its premises. CS S Koley, CS Vishal Arora and CS Vishal bank. He also mentioned that approaching BIFR is too late as at Lochan Aggarwal were the judges of the Quiz and the Quiz was that time company is almost dead. He mentioned that when the conducted by CS Nishat Rab and CS Parul Kapoor. The team finances are taken from different banks then formulation of comprising Sumit Dhawan and Gagan Goel were adjudged as the consensus is very difficult. He explained the reasons of NPAs. winner of the Quiz and the team consisting of Sangeeta Harplani Y K Gaiha, while addressing the gathering expressed his gratitude and Anjna Makhija were adjudged as the Runners Up team of the competititon. September 1203 CHARTERED SECRETARY 2012 ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 134

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for inviting him. He said that the topic of the seminar is very relevant Dr. Ashwani Gupta, Director, State Bank of Patiala spoke on One in the present scenario of the Country and mentioned that the Time Settlement - Concept & Practicalities (case studies). He deliberations of the seminar will bring some solution to the explained the concept of One Time Settlement and mentioned that problems being faced by the corporates. Topic of the seminar is a Banking system in India has grown exponentially and achieved a comprehensive subject and is a buzz word of the corporate sector. status parallel to International system. He mentioned the definition He said that there are occasions when corporates find themselves of NPA and said that OTS is one of the remedy to NPA. He in financial difficulties because of factors beyond their control and discussed the applicability of OTS, basic factors governing also due to certain internal reasons. For the revival of such compromise and settlement and the various processes involved in corporates as well as for the safety of the money lent by the banks the OTS. and financial institutions, timely support through restructuring of Second Technical Session: CS Ashu Gupta, Regional Council genuine cases is called for. However, delay in agreement amongst Member, NIRC-ICSI anchored the Second Technical Session. different lending institutions often comes in the way of such CS Satwinder Singh, Past Chairman, NIRC-ICSI spoke on Fund endeavours. Based on the experience in countries like the UK, Raising through Foreign Investments - Regulatory Considerations Thailand, Korea, Malaysia, etc. of putting in place an institutional (Case Studies). While addressing the gathering, he discussed mechanism for restructuring of corporate debt and need for a various entry routes available in India for foreign investors viz. similar mechanism in India, a Corporate Debt Restructuring System Foreign Direct Investment, Foreign Institutional Investor and was evolved and detailed guidelines were issued by Reserve Bank Foreign Venture Capital Investment Route, etc. He also discussed of India on August 23, 2001 for implementation by financial various types of instruments available for investment in all the three institutions and banks. At the end he mentioned the role of entry routes. He discussed in detail about Foreign Direct Company Secretary in the Corporate Financial Restructuring Investment and Fund raising through External Commercial process. Borrowings. He also informed about the role of Company The best participants & best presenters of the 164th MSOP were Secretaries in these transactions. recognised & awarded by the Chief Guest. Divya Sekhri, AVP, India Infoline spoke on Private Equity Deals - First Technical Session: CS Ranjeet Pandey, Immediate Past Challenges & Learning. She mentioned that Private Equity is an Chairman, NIRC-ICSI anchored the First Technical Session of the angel equity. She discussed the Private Equity structure, the cost seminar. of forward contracts v. Currency Futures. She also discussed the Y.S Jain, General Manager, Corporation Bank Ltd. Chaired the difference between the forward market and futures market. First Technical Session. He gave the background of the Corporate Narendra Kumbhat, Founder Director and Principal Consultant, Debt Restructuring Mechanism and what it envisages. He also Virtual CFO Partners Pvt. Ltd. spoke on Avenues of Raising Funds. informed about the authorities BIFR and DRTs involved in the CDR While addressing the gathering he gave brief introduction of the mechanism. He mentioned that CDR mechanism helps in avoiding financial instruments, security, financial markets viz. money market accumulation of NPAs by the Banks. It is a recovery process and & capital market, sources of funds in Indian capital market etc. He mentioned that Company Secretaries can help in this process. He discussed the structure of the Indian Debt market and mentioned assured full support on behalf of the Corporation Bank. the Regulators & the various debt instruments available in the A D Paliwal, CEO, UV Asset Reconstruction Company Ltd. spoke market. He also discussed about the various other sources of on Debt Recast - Structuring & Negotiation. While addressing the finance viz. FDI, Venture Capital, Private Equity Placement, gathering he dealt with the basic pre-requisites of negotiation. He GDRs, ADRs, FCCBs, QIP Placement and Alternate Investment also discussed about Corporate Debt Anatomy and mentioned that Market, etc. corporate debt is an important financial source for the corporates. It is an integral part of the financial management of the company. He Annual General Meeting said that the management of the debt is very important. He On 28.7.2012 NIRC-ICSI organized its Annual General Meeting at discussed the difference between the financial disaster and New Delhi. Managing Committee Members, Council Member, financial stress. He mentioned about the commitments to be Statutory Auditors & about 200 members were present on the followed for avoiding the situation of the financial stress. He occasion. There was active participation of the members in the suggested for following the system of complete transparency as it various activities and professional development programmes of helps in sustained development. NIRC. Members present came out with a lot of suggestions which R K Arora, DGM, Bank of Baroda spoke on CDR Mechanism- were very well taken and noted by Chairman. NIRC recognized & Procedure & Practice. While addressing the gathering he explained acknowledged the members/professionals who offered honorary the important points to be kept in mind while dealing in CDR services in MSOP, SIP, EDP, career awareness programmes and mechanism viz. eligibility criteria, legal base and financial viability Investor Awareness Programmes organized by NIRC-ICSI. criteria. He discussed the entire procedure to be followed in the CDR mechanism. Cultural Evening On 29.7.2012 the NIRC-ICSI organized a Cultural Evening for September members & their families at Manekshaw Centre Auditorium, New 2012 CHARTERED SECRETARY 1204 ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 135

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Delhi. Dilip Rao Sahib Deshmukh, Chairman, Company Law Board Meeting was well attended by more than 34 members and students. was the Chief Guest. Regional Council Members and around 600 CS G.S.Sarin, Chapter Secretary co-ordinated the meeting. members and their families attended the Cultural Evening. The GURGAON CHAPTER main attraction of the Cultural Evening was the performances by CS Members and Students of the Institute selected through a Valedictory Session of 7th MSOP unique concept of "Talent Hunt". At the end of the Cultural Evening The Gurgaon Chapter of NIRC of the ICSI successfully organized the participation Certificates were issued to the performers and also the valedictory session of the 7th MSOP. A wide coverage of the the Certificates were issued to the Volunteers for their support in valedictory session was given in the leading newspapers Punjab successful staging of the Cultural Evening. Kesari and Aaj Samaj. Meeting of Company Secretaries in JAIPUR CHAPTER Practice - Interactive session with Full Day Seminar on XBRL On 11.08.2012 a full day seminar on XBRL was organized by the Regulators Chapter at its premises. In his welcome address, Vimal Gupta, On 30.7.2012, NIRC-ICSI organized a Meeting of Company Chapter Chairman, informed about the forthcoming Chapter Secretaries in Practice - Interactive session with Regulators at activities of members and students and shared the need of such ICSI-NIRC Building, New Delhi. CS Santosh Kumar of Ministry of kind of seminar due to recent changes of MCA. He said that the Corporate Affairs was the Guest Speaker. Around 70 members challenges are steep, the opportunities are immense but we need attended the meeting. The meeting was very lively and interactive. to multiply our endeavors and struggle smilingly. Members raised a good number of queries which were suitably Shyam Agarwal, Secretary, NIRC introduced the theme, faculties replied by the Guest Speaker. and dire need of the seminar particularly for the practising Blood Donation Camp and members. In the Introductory session Awadesh Kumar Khandelwal elaborated Health Check Up the subject with practical examples and solved the queries of the On 31.7.2012 NIRC-ICSI organized a Blood Donation Camp and participants on XBRL. Health Check-up for the Members & Students at ICSI-NIRC In the Second & Third Technical Sessions, representatives of M/s Building. Teams from Fortis Group of Hospitals and Red Cross Seg Infotech Limited gave live demo on XBRL filing. In the Society were invited for the same. Around 50 Members and presentation the concept of XBRL, impact of XBRL in Financial Students donated blood. matter were explained. In the Fourth Session, Ashu Agarwal, Manager, NSE India Limited, CHANDIGARH CHAPTER explained the role of BSE-SME exchange, obligations, recent Recent Changes in Customs Act circulars issued by SEBI, ICDR, additional responsibilities of On 30.7.2012, Chandigarh Chapter of NIRC of the ICSI organized Merchant Bankers in SME Exchange and other allied issues. The a Study Circle Meeting to discuss Recent Changes in Customs Act. program was coordinated by Girish Goyal. Ajay Sharma, Associate Professor, GGDSD College, Chandigarh was the key speaker. He made an elaborate power point Independence Day Celebration presentation on various concepts of the recent changes in the On 15.08.2012 Jaipur Chapter of ICSI celebrated the 66th Customs Act. Prof. Ajay Sharma covered notified, specified and Independence Day of the Nation by hoisting the National Flag at the prohibited Goods, Valuation Rules and Recent Changes in Chapter premises. Chapter Chairman Vimal Gupta along with other Customs Act in his presentation. The members actively Managing Committee members and dignitaries hoisted the National participated in the discussion with the speaker. The speaker then Flag. Rajeev Arora, Vice President, Pradesh Congress Committee, replied the queries raised by the members. The study circle Rajasthan and Rajasthan Foundation, was the Chief Guest of the meeting was well attended by members and students. CS function. CS R.N. Goyal was the Guest of Honour. G.S.Sarin, Chapter Secretary coordinated the meeting. In his address Rajiv Arora touched upon the economic scenario of Study Circle Meeting on Latest the country and role of professionals in the present era and stressed upon the participation of professional in socio-economic Updation in VAT development of the country. In the welcome address, Vimal Gupta, On 22.6.2012 the Chandigarh Chapter of NIRC of The ICSI Chairman, Jaipur Chapter briefed the need for updation in terms of organized a Study Circle Meeting on the above topic. CA Alok changing regulatory ambience and understanding the Krishan, former Chairman, Chandigarh Branch of ICAI, was the key contemporary development and honing professional, personal, speaker. He made an elaborate power-point presentation on social, technical and academic skills which is important to keep one various concepts of latest Updation in VAT. The members actively miles ahead in all situations particularly at the time when India is participated in the discussion with the speaker. The speaker then replied the queries raised by the members. The Study Circle September 1205 CHARTERED SECRETARY 2012 ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 136

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entering into the 66th year of Independence. A large number of members and students participated in the programme with full Foundation Day Lecture patriotism and enthusiasm. On 31.7.2012 the Foundation Day Lecture of the ICSI - SIRC was MODINAGAR CHAPTER delivered by T S Krishnamurthy, former Chief Election Commissioner of India. T S Krishnamurthy highlighted the growing Independence Day Celebration and important role of Company Secretaries in the company's On 15.8.2012 the Chapter celebrated Independence Day at its management. He also shared his experience on being the premises. The programme was attended by Managing Committee Secretary of the erstwhile Ministry of Company Affairs. Members, Students and faculties by hoisting the tri-colour. Krishnamurthy also observed that the professionals can perform more than what they are doing now. He also fittingly quoted that Lord Hanuman does not know his power unless someone tells him Southern India about it. He also quoted that the role of CS is not only to ensure fair corporate governance but in other areas also. The speaker further said that the CS is the custodian of investors' Regional Council interest. He suggested that the CS should articulate their views and suggestions without any fear and within the framework of applicable Study Circle meeting on GAAR laws, and by following these qualities a CS can stand above the ordinary. He also advised the CS to do courses on law, IPR, etc. in (General Anti Avoidance Rules) order to explore the various opportunities in the diversified areas. On 10.8.2012 CA Aravindanayagi V G, Head, Business Taxation, Deloitte Haskins & Sells, Chennai was the speaker for the study Half-day Seminar on Revised circle meeting on GAAR. Schedule VI On 14.7.2012 a half-day seminar on Revised Schedule VI was The speaker observed that internationally, tax avoidance is organized. The speakers were CA Chinnsamy Ganesan, Director, recognized as an area of concern and several countries expressed BSR & Co, Chartered Accountants, Chennai and CS Dhanapal S, concern over tax evasion and avoidance. Hence, many nations are Company Secretary in Practice, Chennai. legislating the doctrine of GAAR in their tax code. In India, Direct CA Chinnsamy Ganesan spoke on the accounting aspects of Tax Code 2010 addressed this, by bringing in GAAR in addition to Revised Schedule VI. He observed that this Revised Schedule is other specific Special Anti-Avoidance provisions (SAAR). The applicable to all companies, whether listed or unlisted, except, speaker further narrated the important amendments which have certain specific companies. He also informed that this is not been proposed in the GAAR provisions like, to remove the onus of applicable to insurance, banking companies, etc. Chinnsamy proof from tax-payers to Revenue before any action can be initiated further told that the requirements of the Act / Accounting Standards under GAAR and to introduce an independent member from the will prevail over the revised Schedule VI and there will be no more Ministry of Law, in the GAAR approving panel to ensure objectivity "Schedules" instead only "Notes" has to be given. The speaker and transparency. briefed the members that the horizontal format of financial The meeting was lively with the members actively interacting with statements has been dispensed with Schedules Notes. the speaker. CS Dhanapal S spoke on the theoretical and legal aspects of the Half-day seminar on Service Tax - Revised Schedule VI. The speaker observed that the Revised Schedule VI necessitates that if compliance with the requirements Recent Developments of the Act and/or accounting standards requires a change in the On 31.7.2012 the ICSI - SIRC organized a half day seminar on treatment or disclosure in the financial statements, the Service Tax - Recent Developments. The speaker was CS requirements of the Act and/or accounting standards will prevail Sathyanarayanan, Advocate, Chennai. Sathyanarayanan over Schedule VI. CS Dhanapal also made comparison between explained the members in detail about the recent developments in current and non-current assets. The members actively interacted the Service Tax. He elaborated the members on Sections 66B, with the speakers after which, CS Dr. Baiju Ramachandran, 66D, 66C and 66E, etc. The speaker also narrated what are the Secretary, ICSI - SIRC summed up the proceedings of the seminar. items included under the terms 'service' and 'not a service'. BANGALORE CHAPTER Sathyanarayanan explained the members on the negative list of services, declared services, valuation, reverse charge, bundled Chickballapur Udyoga Mela 2012 services, etc. He advised the members about the various On 14 and 15.7.2012 a Udyog Mela was organized at S.J.C. opportunities available to the CS in the areas of indirect taxes and Institute of Technology, Chickballapur and was inaugurated by Dr. in particular in the area of service tax. The members actively M. Veerappa Moily, Hon'ble Union Minister of Corporate Affairs, participated in the discussion. Government of India. Recruiters from multiple industries like Dairy, September Agriculture, Manufacturing, Retail, Hospitality, Automobile, IT, 2012 CHARTERED SECRETARY 1206 ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 137

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KPOs, BPOs, BFSI IT, ITES/BPO, Finance, Banking/Insurance, that his purpose of visit was to locate and ensure availability of such Telecom, Engineering, Hospitality and Construction had infrastructure facilities and other resources before finally passing the participated in the Mela and overall 19,000 students registered for recommendation for setting up of CLB Bench. this Career Development Fair. The Members raised various queries, shared certain concerns and The Bangalore Chapter of the ICSI also participated in the Udyog suggestions which were suitably replied, deliberated upon and Mela to disseminate information about the CS Course among the noted by the speaker and the programme was well attended by aspirants who visited the fair. CS Gopalakrishna Hegde, Central over 60 Members. Council Member, The ICSI; CS Manjunatha Reddy, Vice-Chairman; CS H.M Dattatri, Treasurer of Bangalore Chapter, Sangeetha Flora, Career Awareness Programmes Assistant Director; Noor Sumayya, AEO and other staff of the The Bangalore Chapter of the ICSI conducted 4 (four) Career Bangalore Chapter were present to guide the prospective students. Awareness Programmes during the month of July, 2012 as under: 10 Student Volunteers also contributed their efforts to make the On 23.7.2012 the Career Awareness Programme on Career as a event a grand success. Company Secretary was held at Kristu Jayanti College for 1st year Scroller Standy and Mounted Posters/ banners about the CS B.Com Students. course in English and Kannada were also displayed. The On 25.7.2012 the Career Awareness Programme on Career as a prospectus/handbook explaining the CS course was also available Company Secretary was held at Christ University for First and for sale. Second Year B.Com Students. On 31.7.2012 the Career About 1000 students visited the CS stall at the Mela. Information Awareness Programme on Career as a Company Secretary was about the CS course, the Career Opportunities for a Company held at Jain University for First Year B.Com Students. Secretary were shared with those who visited the stall. Their A total of three hundred students attended the above programmes. queries about the CS course were also replied by the staff and Sangeeta Flora, Assistant Director, Bangalore Chapter of the ICSI students present. Detailed brochures in both English and Kannada was the speaker who explained in detail the course offered by the were circulated among the visitors. The Udyog Mela was fruitful in Institute, eligibility criteria for the course, examination, requirements creating awareness about the Company Secretary Course and the of training etc., the role of Company Secretary and importance of the Profession. profession of Company Secretary in the changing economic scenario. She also highlighted the opportunities available to anyone Indoor/ Outdoor Games who has completed the Company Secretary ship course. She further On 22.7.2012 the Chapter to commemorate its Annual Day enumerated the emerging areas of practice and the changing role of celebrations organised various programmes for the Members and a Company Secretary. She focused on what would be the mindset the Students. and preparation required from a student who wanted to pursue the In this regard, the Chapter organised the following competitions: Company Secretary ship Course. Brochures explaining Company Table Tennis, Shuttle, Chess and Carrom at the Karnataka Secretary ship Course were distributed to the students. Badminton Association and Chess and Carrom at Chapter COCHIN CHAPTER Premises for the students and the members. Around 15 members and 25 students and their families participated in the competitions. Professional Development On 29.7.2012, the Chapter organised Cricket match at Indian Boys Programme High School Grounds, St. Josephs Composite PU College, On 14.07.2012 the ICSI-Kochi Chapter organized a one day Bangalore for the students and the members of the Institute. professional development programme on what's new in New Around 60 members and students were present for the match. Companies Bill and Revised Schedule VI at Kochi. The programme was inaugurated by CS N Balasubramanian, Chapter Chairman. Interaction with Chairman, CLB The speaker for the First Session was CS Asish Mohan, Director, On 30.7.2012 the Chapter organised an Interaction with Hon'ble Arts Management Consultants Pvt. Ltd. who explained in detail the Justice D.R. Deshmukh, Chairman, CLB at Bangalore. CS implications of the provisions in the New Bill. Gopalakrishna Hegde, Member, Central Council, the ICSI in his Post Lunch, the Second Session was headed by CA Pramod, who opening remarks informed the gathering that a representation had spoke on the topic Amended Schedule VI of the Companies Act, been made to the Ministry of Corporate Affairs requesting for the 1956. He explained the implications of the new changes in the setting up of a Company Law Board Bench at Bangalore to cater to Revised Schedule VI. There was an interactive session at the end. the needs of the States of Karnataka and Kerala and in order to Both the sessions were well attended. ascertain the feasibility and the infrastructure available for the same Half- day Joint Programme on the Chairman, Company Law Board was visiting Bangalore. The Chairman, CLB in his address stated that the Company Law Service Tax Board prior to setting up of a Bench follows a summary of procedures On 31.07.2012 the Kochi Chapter of the ICSI in association with to ensure the availability of adequate infrastructure and other amenities to ensure the smooth functioning of a Bench and also said September 1207 CHARTERED SECRETARY 2012 ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 138

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Kochi Branch of ICAI organized a half-day seminar on Service Tax assisted by Nawaz Ahmed. On 11.7.2012 at GRD College of Arts & at Kochi. K.C. Johny, Additional Commissioner, Central Excise & Science, Peelamedu, Coimbatore. CS R.Hariram, Management Service Tax inaugurated the event and in his address explained Committee Member of Coimbatore Chapter and Shyama briefly about the new changes in Service Tax. Vijayaraghavan, Assistant Education Officer addressed more than Jose Jacob, Senior advisor, indirect Tax services, Kochi who has a 80 students. On 16.7.2012 at Erode Arts College, Vellalar College, rich experience of more than 15 years addressed on the topic Kongu Arts & Science College, Erode. CS. C. Thirumurthy, Member during the session. He made a lively presentation on the subject Coimbatore Chapter addressed more than 750 students. Samuel and explained with case laws the practical solutions. The seminar Arthur accompanied and assisted him for the programme. On dealt extensively with the service tax provisions, the recent updates 17.7.2012 at GRD College of Arts & Science, Peelamedu, and amendments of its sections especially after the Union Budget Coimbatore. CS R. Hariram, Management Committee Member of 2012-2013. The seminar also dealt with the negative listed items, Coimbatore Chapter and Shyama Vijayaraghavan, Assistant mega exemption notifications, declared services and the new Education Officer addressed more than 200 students. On reverse charge. 20.7.2012 at Krishnammal College for Women, Peelamedu, Coimbatore. CS.R.Hariram addressed more than 300 students. He COIMBATORE CHAPTER was assisted by Nawaz Ahmed in organizing the programme. On Bhoomi Pooja and Foundation Stone 24.7.2012 at Karappagam University, Coimbatore. CS P.Eswaramoorthy addressed more than 300 students. On Laying Ceremony 25.7.2012 at Dr. NGP Arts & Science College, Coimbatore. CS On 3.7.2012 on the special occasion of laying the foundation stone R.Hariram, addressed more than 400 students. On 26.7.2012 at and the Bhoomi Pooja for the new building of Coimbatore Chapter, PSG College of Arts and science, Coimbatore. Shyama at 556, Mettupalayam Road, Coimbatore, was performed. The Vijayaraghavan addressed more than 60 students. event was honored by the presence of Dr.M.Veerappa Moily, On 27.7.2012 at PSG College of Arts and science, Coimbatore. Hon'ble Union Minister of Corporate Affairs, Government of India. Shyama Vijayaraghavan addressed more than 60 students. Other eminent personalities present on the occasion included Nesar Ahmad, President, S.N.Ananthasubramanian, Vice- HYDERABAD CHAPTER President, N.K.Jain, Secretary & CEO, the ICSI, G.Ramasamy, Study Circle Meeting on Cartels Past President, the ICAI, M.Gopalakrishnan, President, ICWAI, under Competition Law - Mahesh Kuvadia, Regional Director, Chennai, Manuneethi Cholan, ROC, Coimbatore, R.Sridharan, Chairman, ICSI-Coimbatore Need for Governance Infrastructure Committee, S.S.Marthi, Chairman, SIRC, Chennai, On 14.7.2012 the Chapter organized a Study Circle Meeting on Baiju Ramachandran, Secretary, SIRC, Chennai, Cartels under Competition Law - Need for Governance, an initiative Ramasubramaniam C, Member, SIRC and Management to encourage emerging Company Secretaries to lead and gain Committee Members, ICSI Coimbatore Chapter and Chapter expertise on emerging issues to be the leaders of the future. The students. More than 250 participants including members and Speakers for the said subject were CS Rahul Jain, Partner, RANJ students graced the occasion and cherished the Bhoomi Pooja and & Associates, Company Secretaries and CS Tulsi Agarwal, laying of Foundation stone event. Company Secretary, Basai Steels & Power Private Limited. CS Shujath Bin Ali, Chapter Chairman, welcomed the gathering Career Awareness Programmes and informed the members about its new Thought Leadership On 4.7.2012 the Chapter as part of its Career Awareness drive Platform. To start with, CS Tulsi Agarwal quickly touched upon the aimed educating the student community on the benefits of evolution of the Competition Act, 2002 with provisions with respect Corporate Secretaries course organized a Career Awareness to Anti-competitive Agreements, Abuse of Dominance and Programme at Krishnammal College for Women, Peelamedu, Combinations citing certain prominent cases. Thereafter, in the Coimbatore. CS P.Eswaramoorthy, Vice Chairman of the Chapter wake of the recent judgment by the Competition Commission of addressed more than 300 students. He was assisted by Nawaz India slapping Rs. 6,300 crores penalty on 11 cement companies in Ahmed, Chapter Official in organizing the programme. India for their involvement in Cartel formation resulting into On 9.7.2012 the Career Awareness Programme was held at GRD appreciable adverse effect on Competition, CS Rahul Jain covered College of Arts & Science, Peelamedu, Coimbatore. the aspects related to Cartels, its characteristics and its impact on CS.G.Ayyasamy, Member of Coimbatore Chapter addressed more Competition and various stakeholders. than 350 students. He was assisted by Samuel Arthur, Chapter The speakers highlighted the emerging role Company Secretaries official in organizing the programme. On 10.7.2012 at Krishnammal in Employment as a Compliance Officer under Competition Act and College for Women, Peelamedu, Coimbatore. CS S.Venkatesh, advisory facet of Practising members in respect of strategizing Chapter Treasurer addressed more than 300 students. He was Combinations, drafting of various agreements which may attract Competition issues, guiding in case of remedy for violations of September Competition Act while citing various judicial pronouncements. PVS 2012 CHARTERED SECRETARY 1208 ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 139

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Jagan Mohan Rao, the Past President of the ICSI congratulated the Course and Opportunities. T.Raja, Chapter Office Incharge clarified efforts of speakers with his delightful Sanskrit Slokas. The queries of the students and also distributed brochures explaining Chairman also applauded the speakers for enlightening the the CS course to them. members on the upcoming competition policies in India. One Day Seminar on Revised Talk on Brand CS & Brand You - Opportunities Unlimited Schedule VI and XBRL and CARR & On 23.7.2012 the Chapter organized a Talk on Brand CS & Brand CARO (Cost Accountants' Role). You - Opportunities Unlimited at Taj Mahal Hotel. CS Shujath Bin On 28.7.2012 the Madurai Chapter Successfully organised a one Ali, Chapter Chairman in his welcome address highlighted the day seminar on Revised Schedule VI and XBRL and CARR & concept of Brand and importance of the Brand CS. CS Pavan CARO (Cost Accountants' Role) at Madurai. B.T.Bangera, Kumar Vijay, Past President, the ICSI & MD, Corporate Managing Director of M/s. Hi-tech Arai (P) Ltd, Madurai Professionals Capital Pvt. Ltd. was the speaker who explained the inaugurated the seminar. In his address he expressed the need for importance of Brand CS, Personal brand. He stressed on attributes the companies to reduce cost to maintain the profit as now a days like passion, self-vision, dare to dream, opportunities galore, and the buyers are determining the price and the sellers has to enhancing value and opined that CS professionals need to look compete in the market. The Speaker of the Topic of Revised beyond the conventional areas considering the wide knowledge CS Schedule VI was S.Saraskumar, Practising Company Secretary, professionals possess. Members actively participated in the Chennai and for the topic Cost Accountants' Role in CARR Dr.I. Interactive session. Asok, Chairman, Madurai Chapter of ICAI. MADURAI CHAPTER Annual General Meeting Western India On 21.6.2012 the Annual General Meeting of Madurai Chapter was held. S.Kumararajan, Chairman took the chair. The Secretary read the Annual Report and Treasurer presented the Accounts for the Regional Council year ended 31.3.2012. After the discussions Annual Report and Audited Accounts were passed unanimously. Members were Annual Regional Conference 2012 suggesting ways and means to improve the Chapter activities. The On 14 and 15.7.2012 the Regional Council organised its Annual Chairman thanked them and accepted their valuable suggestions Regional Conference at Indore.Ashish Chauhan, Interim CEO, BSE and assured to implement wherever possible. was the Chief Guest of the inaugural Session. The other dignitaries and faculty members were N Ravichandran, Director, IIM, Indore, Career Awareness Programme Nesar Ahmad, President, S.N. Ananthasubramanian, Vice On 10.7.2012 the Madurai Chapter Organised Career Awareness President, Umesh Ved, Central Council Member,Atul Mehta, Programmes at Sivakasi at Sri Kaliswari College and at Ayya Central Council Member, N.K. Jain, Secretary & CEO, the ICSI, Nadar Janaki Ammal College. MahavirLunawat, Chairman, RaginiChokshi, Secretary, Ashish S.Kumararajan, Chapter Chairman addressed about the institute, Garg, Tresurer, ICSI-WIRC, Ritesh Gupta, Chairman, Ashish course and opportunities. R.K.Bapulal, Practising Company Karodia, Secretary, Indore Chapter, Deepak Sharma, Director & Secretary in his address explained about opportunities of CS CEO, SarthiAdvisors, V.S. Sundaresan, Chief General Manager, course in Whole-time Practice and informed the students to join the SEBI, Susanta Kumar Das, AGM, SEBI, Santosh Kumar, LLP course in view of the benefits available. T.Raja, Chapter Office in Registrar, Varun Gupta, Professional Teacher, Hitesh Buch, Vice charge distributed brochures and clarified the doubts of the Chairman, ICSI-WIRC, Hon'ble Justice Mool Chand Garg, MP High students. HOD of Department of Corporate Secretaryship and Court, Indore Bench, Indore. Around 450 delegates attended the other lecturers participated in the programme. On.11.7.2012 the Conference. Programme was held at Madurai Lady Doak College. Head of the AHMEDABAD CHAPTER Department of Commerce Nagammai welcomed the gathering. S.Kumararajan, Chapter Chairman explained about the institute, Independence Day Celebration course and opportunities and advised the students to join the CS On 15.8.2012 the Ahmedabad Chapter of WIRC of the ICSI course immediately along with their regular curriculum to enjoy the organized the Flag hoisting ceremony on the occasion of benefits of CS course without loss of time. T.Raja, Chapter Office Independence Day at its premises. in Charge explained the purpose of oral coaching, how to write the The Indian Flag and ICSI Flag were unfurled by the Chairman - examination and to come out successfully. Around 46 students Rajesh Parekh and Secretary - Chetan Patel. The National Anthem joined the course. On 19.7.2012 at Ilyangudi Dr.Zahir Husian was sung during the flag hoisting ceremony. The dignitaries like College and On 2.8.2012 at Nadar Saraswathi College, Theni. past Chairmen, WIRC Members, Managing Committee Members, S.Kumararajan, Chapter Chairman explained about the institute, September 1209 CHARTERED SECRETARY 2012 ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 140

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Members of Ahmedabad and Staff were present on the occasion. NASHIK CHAPTER Full Day National Seminar on Capital Half-day seminar on routine Market, Corporate Governance and Company Law Compliances On 7.7.2012 the Chapter in association with the Nasik Ojhar Chapter of Credit Rating Cost Accountants organised a half-day Seminar on routine Company On 28.7.2012 as a part of ICSI - ICRA Joint Chain Programmes, Law Compliances. Salim Raja ACS, FCA was the faculty who the Ahmedabad Chapter of WIRC of the ICSI organized a Full Day enlightened the participants on the topic and the seminar was well National Seminar on Capital Market, Corporate Governance and attended by the professionals and students in and around Nashik. Credit Rating at Ahmedabad. More than 170 Members of the Institute attended the seminar Recent Changes in Service Tax wherein 04 PCH was granted to the attendees. There were four Due to recent changes in Service Tax and introduction of Negative sessions of one and a half hour each. The seminar began with the List and change of reverse charge mechanism in certain services a inaugural address by Rajesh Tarpara - PDC Committee Chairman necessity was felt by Nashik Chapter of the ICSI and Nasik Ojhar of Ahmedabad Chapter and by Ashish Doshi - WIRC Member of the Chapter of Cost Accountants to have a seminar on Recent Changes ICSI. The faculties were introduced and were welcomed with "Good in Service Tax. The speakers were R K Deodhar - Leading Luck" plants to retain the concept of "ICSI - Go Green". consultant of Excise and Service tax who talked in detail about First and Second Session: The sessions were addressed by Ankit Negative List and Exempted services with general changes taken Patel - Senior Analyst from ICRA on topic - Credit Rating (Overview place in Service Taxes. A B Nawal guided the gathering on Reverse of Rating Process, Credit Rating of SMEs and Rating of Bank lines Charge and Bundled services and also explained about Declared of Credit and other products). Patel spoke on Credit Risk Services. N K Nimkar - FCMA from Pune spoke on Place of Provision Assessment, Rating Agency Perspective, Relative Scales to of services and Abatement. The session was participative and classify the companies, uses of Credit Rating for Investors, issuers, concluded with the question-answer session wherein the faculty intermediaries and regulators. He said that key success factors for members replied the queries raised by the participants. Pradnya rating are credible and independent structure and procedures, Chandorker - CMA coordinated the programme. reliance on market mechanism, creation of active debt market etc. He spoke on rating approach, rating methodology, long term and PUNE CHPATER short term rating scale and regulatory requirements for credit rating. Full day seminar on Listing of The session ended with interactive case studies. Aniimesh SME and ICRA Corporate Bhabhalia - Senior Business Development Head from ICRA also gave his gracious presence. Governance Rating Third Session: Ashish Chauhan - Interim CEO - BSE took the Third On 7.7.2012, Pune Chapter organized a full day Seminar on SME Session on the topic SME Listing. Chauhan started his session with the and ICRA Corporate Governance Rating at Pune. In all 62 beginning of concept of Derivatives in Financial Market. He quoted delegates were present at the seminar. Haresh Hinduja, VP various examples and stories on the options. He spoke on the Linkintime India Pvt. Ltd and Anjan Deb Ghosh, Senior Group VP, importance of SMEs in today's world. He said that SMEs play an ICRA were the eminent faculties for the seminar. The Programme important role in removing a portion of unemployment in the market by received an overwhelming response from the Members and other opening various prospective professions. He said that SMEs and CS participants. All the sessions were very informative and well are related because Company Secretary advises SMEs on appreciated by the gathering. compliances and benefits of a company to get listed with SMEs. Two days Conference on Mergers & Fourth Session: The Fourth Session was on SEBI Stock Brokers Audit by Rajiv Desai - Practicing Chartered Accountant, Amalgamation - Creating Growth Ahmedabad. The speaker elaborated the guidelines of internal Opportunities audit of stock brokers, client registration and anti money laundering On 27 and 28.7.2012 the Pune Chapter organized a two-days compliance, order management and risk management system, Conference on Mergers & Amalgamation - Creating Growth contract notes, margin details and statement of accounts, how to Opportunities at Hotel Le Meridian. In all 216 delegates attended deal with client funds and securities, banking and demat account the workshop. CS Vivek Sadhale, Vishwas Mahajan, Entrepreneur operations, terminal operation, investors grievance handling, - Compulink, Lekha Nair, VP Corporate Finance Enam Securities maintenance of books of accounts, system and procedures Pvt. Ltd., S Sundareswaran from Morgan Stanley, Anil Patwardhan pertaining to PLMA 2002, transfer of trades, margin trading, internal -CFO KPIT Cummins, CA Parag Ved, Saumil Shah, Partner, M& A trading and execution of power of attorney and SEBI and Exchange KPMG, Adv Alhad were the eminent faculty members for the Communications vide circular with point wise references. programme. The programme received an overwhelming response from the Members and other participants. All the sessions were September very informative and well appreciated by the gathering. 2012 CHARTERED SECRETARY 1210 ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 141

ICSI - CCGRT News from the Institute & Regions

Lending and the various needs for the Growth of the Indian ICSI - CCGRT Economy. She said that India is ranked 2nd globally for consumer base. Her presentation was very lively and impressive. She Full Day Programme on FEMA, concluded the session by elucidating the ways in which Foreign Anti-Money Laundering and Exchange can flow to India, the ways by which investments can be refunded and the regulatory provisions which needs to be complied KYC Guidelines thereupon. On 18.8.2012, ICSI-CCGRT organized a Full Day Programme on Thereafter, Raj Tripathi made a presentation on 'Anti Money FEMA, Anti Money Laundering and KYC Guidelines at its premises Laundering (AML) Measures & KYC Guidelines'. He commenced in Navi Mumbai. Speakers like Attha Omar Basheer, General his session by throwing light on the KPMG India Anti-Money Manager, Foreign Exchange Department (FED), RBI covered the Laundering Survey 2012. He said that after becoming the 34th topic of FEMA Reporting Compliances; Anand Mehta, Senior country member of Financial Action Task Force (FATF), India's Partner, Khaitan & Company threw light on FDI Sectoral Policy and focus on Anti Money Laundering (AML) measures has increased. Recent Changes along with the Forex Risk Management; Sudha G. He then highlighted the key areas in AML compliance - KYC norms, Bhusan, Associate Director, International Tax and Regulatory client screening, transaction filtering and monitoring, reporting Services - Taxpert Professionals covered the subject of Outbound mechanism, AML awareness creation and the cost of compliance. Investments and Raj Tripathi, Ex-Head - Compliance and Team He expressed his concern about the fact that no stringent Member, Standard Chartered Bank, had discussions on Anti Money amendments have been made in the Prevention of Money Laundering & KYC Guidelines. The programme was well attended Laundering Act (PMLA), 2002 after India became a member of and the queries raised by the participants were discussed and FATF. In conclusion, he discussed the obligations of Banking clarified by the speakers. Companies, FIIs and various intermediaries of Security Markets Attah Omar Basheer, spoke on reporting and various compliances w.r.t. maintenance of proper records and furnishing of information under FEMA. He first explained the Current Account and Capital within a particular timeframe. The programme was widely Account Transactions under FEMA followed by investments via appreciated by the participants. different routes i.e. Automatic Route or Approval Route by which a Programme on Working ‘ Foreign Exchange Transaction can be made. He then enlightened the participants about the reporting mechanism of ODIs and FDIs to Capital Finance RBI under various situations viz. entry routes, eligibility, pricing On 12.8.2012 ICSI-CCGRT, in co-ordination with SEIS College of guidelines, sectoral policy, issuance of shares or ADR/GDR, Management Studies organized a full day programme on Working transfer of shares, FII-PIS transactions, ECB returns and Trade Capital Finance at SIES College of Arts, Science and Commerce, Credits etc. He illustrated the framework for reporting and also Jain Society, Sion (W). The programme was well attended by highlighted the consequences of non-compliances within a students and members. particular timeframe under FEMA. The speakers for the programme were G Subramaniam, Former Anand Mehta, Senior Partner, Khaitan & Co., discussed the recent President Treasury & Funding, Reliance Petroleum Ltd., Govind changes which have been incorporated under FDI Sectoral Policy. Subbanna, DGM & Relationship Manager, State Bank of India and He gave thorough insights into the changes and its impact, S Sivakumar, Deputy Vice President, Product Head - Dealer especially in case of the most discussed topic in recent days - FDI Finance. in Retail Sector. He also briefed about the origin and the history of G Subramaniam initiated the discussion by giving an overview of Retail Trade in India in 90's. In his presentation to the participants, working capital management, credit appraisal practices, credit rating he covered the conditions involved in Cash & Carry Wholesale and pricing. Initially, he shared his experiences of dealing with Trading, Multi Brand Retail Trade, their current position, recent people around the globe. He then discussed the various obstacles changes, various challenges involved in the much hyped 100% he had faced while managing the working capital of one of the retail under FDI and recent changes in Brown Field Investments and India's largest private sector players. This made the session very Construction & Development Sector. Moving on to Forex Risk encouraging. He also explained the concept of suppliers' credit Management, he elucidated the various hedging tools and along with the effects of rupee depreciation on working capital methodologies to cover the risk involved in Forex. He concluded by management and precautions to be taken while managing working saying that even though Forex Risk Management focuses on the capital. He then made a presentation on working capital negative word 'Risk', the aim is not to raise the obstacles to the management. Citing some examples, he said that issue of FCCB by transaction, but to facilitate transaction by identifying various risks Essar Gujarat and buying of crude oil from Venezuela and Iran are using Hedging Strategies and Modern Risk Management Policies. classic cases of working capital management. In managing working Sudha G. Bhusan discussed various legislations relating to the capital, drafting of the documents should be in a simple manner as Outbound Transactions such as FEMA Act, 1999, Customs Act, it requires less interpretation. Transfer Pricing Regulations, IFRS, DTAA, Companies Act, 1956 etc. She also discussed Individual Remittances, Borrowing and September 1211 CHARTERED SECRETARY 2012 ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 142

News from the Institute & Regions ICSI - CCGRT

Govind Subbanaa and S Sivakumar conducted a session on legal provisions. Sharing his experience, he said that whenever an Emerging Trends in Working Capital Finances - Large Companies inspector comes for inspection at the factory, the company's and SMEs. After sharing their experiences on the subject, the representative should ask for his identity card. This is in order to speakers had a panel discussion with the participants. Many queries confirm the identity of the inspector. He also highlighted the fact that were raised by the participants on the conceptual understanding of the Factory Inspector can always find the non-compliant provisions. working capital components viz. what are the meanings of open R Balakrishnan had a discussion on the returns and registers to be account sales, working capital term loan, non-fund based facilities, maintained under certain important labour legislation. Beginning packaging credit?, what are the considerations taken into account with the Factories Act 1948, he enumerated the various registers before lending money to a company under CDR scheme etc. All the and returns to be filed under Contract Labour (Regulation & queries of the participants were well addressed by the speakers. Abolition) Act 1971, Minimum Wages Act 1936, Payment of Wages Two Days Residential Programme on Act 1936, Payment of Gratuity Act 1972, Payment of Bonus Act 1965, Equal Remuneration Act 1976, Industrial Employment Labour Laws and Compliances (Standing Orders) Act 1946, Shops & Establishments Act, National On 21 and 22.7.2012 the ICSI-CCGRT conducted a two days & Festival Holidays Act, Professional Tax Act, Employees State residential programme on Labour Laws and Compliances at its Insurance Act 1948, Employees Provident Fund and Miscellaneous premises, Navi Mumbai. The programme was attended by members Provisions Act 1952, Maternity Benefit Act 1961 and Employment of the Institute, students and other professionals. Exchange (Compulsory Notification of Vacancies) Act 1959. He then Dr Rajan Tungare, Director, Maharashtra Institute of Labour Studies gave a detailed list of registers, forms, records, registers to be inaugurated the programme. The speakers for the programme were maintained and the specific requirements relating to rest rooms, Manohar Gajare, Retired Joint Labour Commissioner, Government safety measures etc. to be complied with under the Factories Act of Maharashtra; R Balakrishnan, Company Secretary, Pune; Lancy 1948. He highlighted the fact that all these measures are to be Desouza, Advocate Bombay High Court; P G Murthy, Advisor implemented with a view to give better working environment to (Labour Laws) and Ramesh Soni, Proprietor, RL Soni & Associates. employees. He then explained the role of company secretary under Dr Tungare gave a general overview of existing scenario on labour the Factories Act 1948. laws. He explained the working of International Labour organisation On the 2nd day, P G Murthy conducted a session on Compliances (ILO) and the initiatives taken by it to improve labour conditions. under Bombay Shops & Establishment Act, Gratuity Act and While explaining the case of Maruti Suzuki, he said that it is a good Employment Exchange Act. He explained in detail the compliances example of lack of communication and how the labour management to be ensured under the acts and also gave certain case laws on the relations should not be. Dr Tungare explained the evolution of subject. He suggested that it is always advisable to follow the bare labour laws and explained its significance in the lives of employees. Acts for knowing the provisions of any Act. He said that labour laws are applicable to all the employees of the Lancy Desouza covered the compliances under Payment of Wages company irrespective of the hierarchy. Act 1936, Minimum Wages Act and Contract Labour (Regulation & The next session for the day was conducted by Gajare, who gave a Abolition) Act 1970. The speaker listed out the registers to be brief overview of the Factories Act 1948. He quoted the case of maintained and returns to be filed under these acts and shared his Bhikusa Yamasa Kshatriya (P) Ltd. v. UOI in which the apex court experience on the subject with the participants. Replying to a query had adjudged the scope of the Act. He also briefed the participants raised on the labour law notices and inspection, Desouza said that about the welfare measures, penal provisions, safety measures while replying to the notices of revenue authorities one should base required to be taken under the said Act. Gajare then explained the their replies by quoting case laws, if any. If there is a Supreme Court meaning of Inspection as "supervision of protective laws and or any High Court judgment on the query raised, then one can suffix supervision over standard fixed". He also discussed the evolution of the reply by quoting the judgment. Elaborating further on this, the labour laws. First welfare measure was taken in UK for preservation speaker said that the Commissioner would not dare to contradict the of the health and morale of apprentices and others employed in decision of the judicial authority. Lancy Desouza then threw light on cotton mills in 1802. First law relating to protecting child workers in the cases of Rajendra Deva v.Hari Fertilizers - Section 10 of the mills and factories was adopted in France on March 22, 1841. Gajare Bonus Act; R C Agarwala v. Payment of Wages Inspector MP - then explained the role of ILO. ILO has served as a model for most Whether directors of company are personally liable for payment of National Laws and Regulations creating modern inspection services. wages to workmen during his interactions. The session was quite The purpose of inspection was a) to secure enforcement of the legal interactive. provisions relating to conditions of work viz. Hours, Wages, Safety, Ramesh Soni then discussed the Maharashtra Profession Tax Act, Health and Welfare, Employment of children and young persons etc. Workmen's Compensation Act, Payment of Bonus Act, Employees b) to supply technical information and advice to employers and State Insurance Corporation Act and Mumbai Labour Welfare Fund workers concerned, the most effective means of complying with the Act. He explained the various concepts from the Act and legal provisions and c) to bring to the notice of the Competent comprehensively enumerated the compliances and returns to be filed. Authorities, defects or abuses not specifically covered by the existing After explaining each and every Act in brief, he took a recap by asking September queries to the participants. This kept the session very lively. 2012 CHARTERED SECRETARY 1212 ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 143

CENTRE FOR CORPORATE GOVERNANCE, RESEARCH & TRAINING (CCGRT)

In collaboration with PCH-12 PDP-24

Organises Three days Workshop on“Risk, Regulation and Compliance” (With special focus on Banking)

Background Rapid innovations in financial markets, globalisation & deregulation have not only changed the functioning of the banks but exposed them to various types of risks. The ever increasing regulations, increasing complexities involved in handling financial crimes, complex products and higher geographical reaches make it necessary for more effective risk management and compliance function. Compliance is one of the core areas on which banks need to and are increasing their focus on efforts to address existing and potential risks.

In order to provide the Company Secretaries and others dealing with Risk & Regulation, the practical insights into Banking and equip them with the requisite mindset to discharge the Compliance function in banks, ICSI-CCGRT is organizing this three days workshop on ‘Risk, Regulation and Compliance’ (with special focus on Banking) in collaboration with Indian Institute of Banking and Finance (IIBF).

Day, Date & Thursday, September 27 to Saturday, September 29, 2012 Timing 09.30a.m. – 05.30 p.m. with lunch and reading material

Venue ICSI-CCGRT, Plot No. 101, Sector 15, Institutional Area, CBD Belapur, Navi Mumbai – 400 614

Proposed n Professional Overview of Banking and Indian Banking System Coverage n Banking Regulatory Framework n Credit Risk, Operational Risk, Market Risk and its Management n Risk Management and NPA, with particular reference to RBI Master Circular n Statutory Compliances in Banking Sector including the methodology of compliances and sources of information n Understanding Compliance vis-à-vis Risk

Speakers Speakers from IIBF with exposure to the subject will address the participants. include

Participant Company Secretaries, Banking Professionals, Compliance Officers / Company Mix Secretaries of Banks.

Fees for all Members ` 8,000/- per Member 3 days Students ` 7,500/- per Student (Inclusive of Others ` 10,000/- per participant Service Tax) to cover the cost of workshop kit, lunch and other organizational expenses

Participation restricted to ensure effectiveness; hence limited registration on First Come First Serve Basis Participants attending the workshop on all days are entitled to participation certificate Registration : The Fees may be drawn by way of D.D / local cheque payable at Mumbai in favour of “ICSI-CCGRT A/c” and sent to The Dean, ICSI-CCGRT, Plot No. 101, Sector -15, Institutional Area, CBD Belapur, Navi Mumbai - 400 614. Ph. : 022- 27577814, 4102 1506 e-mail : [email protected] For clarification please contact CS Priya P Iyer, Program Co-ordinator, ICSI-CCGRT. *Prior registration desirable

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Memoranda of understanding

Memorandum of understanding Memorandum of understanding between between Stock Exchange Investors’ National Stock Exchange of Protection Fund (BSE-IPF) India Ltd. (NSE) and the ICSI and the ICSI

he Institute entered into an MOU with he Institute entered into an MOU T Stock Exchange Investors' T with National Stock Exchange of Protection Fund, a recognised Public India Ltd. Trust established by BSE Limited. The areas of collaboration under MOU include: The areas of collaboration under MOU include: u Fee concession to the students of ICSI, in NSE's Certification in Financial Markets (NCFM) u Conducting investor awareness programmes on modules, being conducted by NSE i.e. Micro, Small & Medium Enterprises (MSMEs) across India. For Foundation Passed Students Financial Markets : A ‘Beginners’ Module u Conducting programmes for creating awareness about International Financial Reporting Standards For Executive Passed Students (IFRS) across India. Financial Markets : Securities Market Module

u Training and education programmes in financial For Professional Passed Students market interface with corporate laws, secretarial Financial Markets : Capital Markets Module practices and corporate governance. u Visits of Students and Members of ICSI to NSE u Webcasts of panel discussion and presentation of through ICSI Centre for Corporate Governance- experts on various aspects of financial markets Research and Training (ICSI-CCGRT), Navi Mumbai. and corporate governance and creating useful web contents for corporates. u Training to Company Secretaries in securities markets and corporate governance. u Conducting Investor Awareness and Education Programmes related to capital market. u Joint organisation of Investor Awareness Programmes. u Supporting ICSI initiative to help its students to understand better about capital market. u Joint compliance seminars for the trading members of NSE and Compliance Officers of the u Participation of BSE senior management as listed companies. panelists at conferences/ seminars organized by the ICSI across India or vice versa. u Regular exchange of resources of mutual interest and Exchange of faculty (ies). u Research in Capital Market through regular exchange of resources. u Co-operation in developing curriculum of academic and continuing education programmes and developing new certification modules. September 2012 CHARTERED SECRETARY 1214 ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 145

Appointments

REQUIRED

REQUIRED A QUALIFIED COMPANY SECRETARY COMPANY SECRETARY

A leading Private Ltd. company in the business of import, export and to act as manufacturer's We require a qualified Company representative, having its Registered office in Secretary to look after day-to-day Mumbai, requires a qualified Company Secretary with secretarial work & to deal with 3 years relevant experience. appropriate authorities. We are a private A prospective candidate should be well versed with limited company having capital base of the Companies Act 1956, and should have good Rs. 6 Crores and engaged in the knowledge of Secretarial and legal matters such as manufacturing and designing of garments compliances with various laws, filing of various and wearing apparels. documents/returns with ROC, drafting of minutes/agreements, and must have handled work related to secretarial formalities and regulations. We offer a good salary package as prevailing in the industry Interested candidates may send their detailed resume indicating expected remuneration to : Rinku Sobti Fashions Pvt. Ltd. The Director 1249 A/9, Kishan Garh, Nagase India Private Limited JNU Road, Vasant Kunj, 404 - Vaibhav Chambers, New Delhi-110070 BKC, Bandra (East), Phone No. 011-64647859 Mumbai - 400 051. Mail ID - [email protected]

KIND ATTENTION MEMBERS! REQUIRED On the advise of the Editorial Advisory Board of Chartered Secretary, it has been decided to commence a new column by the name Company Secretaries' Diary wherein concerns of company secretaries with hands on COMPANY SECRETARY experience as company secretary/practising company secretary will be featured. Members having such experience may narrate the same through this column. A leading Public company in manufacture and supply of power equipments sector, having its registered office in Mumbai requires a qualified All such narratives/write-ups/articles be forwarded to the Company Secretary with 3 years of relevant Editor, Chartered Secretary for consideration by the experience. Board for publication in the journal.

A prospective candidate should be well versed with the Companies Act 1956, SEBI Regulations, FEMA and related matters and must be well conversant with the Secretarial & Compliance Matters. READERS' WRITE Interested candidates may send or email their detailed resume indicating expected salary to the The erstwhile PONITS OF VIEW column of below mentioned address: Chartered Secretary has been re-captioned as READERS' WRITE. Members are invited to send in their queries and views for consideration KRYFS Power Components Limited for publication in this column for soliciting Aza House, 3rd Floor, views/comments from other members of 24 Turner Road, Bandra West, the Institute. Mumbai 400 050 Email: [email protected] September 1215 CHARTERED SECRETARY 2012 ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 146

40TH NATIONAL CONVENTION OF COMPANY SECRETARIES

Days & Dates : Venue : Thursday-Friday-Saturday, Aamby Valley, Mumbai October 4-5-6, 2012

THEME VISION 2020 : TRANSFORM, CONFORM AND PERFORM

very moment, the world is in transition, so the It is in this backdrop, the theme of the 40th National change is a constant and dynamic process. Convention has been devised as VISION 2020 - What is more important in today's context is the TRANSFORM, CONFORM AND PERFORM to be E speed of change in all spheres of human deliberated in the following four technical sessions: endeavour. Change becomes value driven only when the determination to bring change is 1. Economic Volatility and Risk Management defined and well versed. Change cannot result 2. CS - Whistle Blower or Conscience Keeper in value added proposition unless it is driven in 3. Financial Markets - Engine for Economic Growth a right perspective. 4. Challenges and Opportunities for SME Sector

The vision to bring change commences with a tiny step and such vision is called "to transform". The transformation - a First Technical Session: radical change that catapults one into another dimension of Economic Volatility and Risk Management existence, possibly the one that is not feasible without being transformed. Every paradigm needs a defined vision to stir olatility is variability. Over the past few years, the the imagination and creativity with motivation and V World economy has become much more volatile; that determination leading to transformation. is, the swings from boom to bust have been greatly increased. Despite several growth drivers like Vision 2020 in its broader perspective is metamorphic in improved technology, better monetary policy; nature requiring to transform from the nascent stage to a researchers have found little consensus on why such level where the whole structure is redefined not only in volatility exists despite such favorable initiatives. In confirmation to the present but in conformation to future. the context of recent trend, such economic volatility in Vision 2020 is to lay foundation for proactive changes India can be attributed to the rupee depreciation and igniting minds to create niche. the downgrade of the Sovereign rating.

One may find the similar connotations for the terms Volatility and risk are go getter in the sense that the risk is 'transform' and 'conform' when viewed and applied in the inherent in volatility. As the economies are facing volatile context of corporate environment, which has seen an array conditions, they are operating in a risk filled environment, of reforms in terms of enactment of new legislations, such risk may be large or small and closed or open. It is not mobilisation of capital market, inflow of foreign capital, that risk is a bad phenomenon often it is considered as growth in number of MNCs etc. and has opened new efficient measure to growth of the economy but at the same opportunities for professionals like Company Secretaries. time, risk needs to be managed. In this current economic milieu, risk can be from both expected and unexpected These opportunities could be realised into value added sources and economies need to respond proactively, taking propositions only when there is transformation and the proper steps to assess, prioritize and manage all risks in conformation to the expectations of change that would lead a strategic, effective and efficient manner. to performance enactment for a sustainable competitive advantage. It is not a one time exercise. As the change is In this context, the first technical session has been designed constant and dynamic, the efforts should also be to deliberate upon the factors associated to sovereign proportionately constant and dynamic. downgrade resulting in economic volatility thereby,

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reasoning out the ways to mitigate the risk inherent in Fourth Technical Session - Panel Discussion volatile economic conditions. Challenges and Opportunities for SME Sector Second Technical Session:Panel Discussion MEs are universally acknowledged as major S contributors of economic growth process and even CS - Whistle Blower or Conscience Keeper larger contributors to exports and employment. In the Indian context, the critical role and place of the SME histle Blower or Conscience Keeper! Though, prima sector cannot be over-emphasized in employment W facie both the words may sound synonymous, there is generation, exports and inclusive growth. a thin line of demarcation between the two. Whistle blowing is about speaking out on malpractice, SME sector is facing new challenges in the wake of misconduct, corruption, or mismanagement; whereas, increasing globalization and there is a pressing need for this conscience is an inner voice viewed as acting as a sector to reinvent itself by enhancing its efficiency and guide to the righteous behaviour. productivity in order to remain competitive, both domestically as well as internationally. It is in that context The line of demarcation is that while whistle blowing pertains the Government has accorded priority to this sector in order to the situation after the wrong is done or about to be done to achieve balanced, sustainable and more equitable the conscience of a person stops one from committing the economic growth. wrong. These are two sides of the boat, where keeping inside the boat is as important as keeping outside. The next level of growth in the Indian economy will have to necessarily come from the SME sector. In order to transform Economic volatility, global competition, growing risk appetite India into a major manufacturing hub, the Indian SMEs must demands the governance professionals, the Company embrace change so that they can find a place for Secretaries to priorities their role as Conscience Keeper and themselves in the global competitive environment. Whistle Blower. This technical session has been structured to deliberate In this backdrop, the second technical session is devised to upon the challenges of SME sector, government initiatives deliberate as to how the Company Secretaries should priorities and the role of professionals to provide the SMEs an their role as conscience keeper and Whistle Blower. enabling environment for a visible and sustained growth. Third Technical Session: Tentative Programme Financial Markets - Engine for Economic Growth DAY 1 - Thursday, October 4, 2012

1.00 PM onwards Registration of Delegates n recent years, an increasing amount of attention has 3.00 PM to 4.30 PM OPENING PLENARY I been devoted to the connection between financial markets and economic development. One of the 4.30 PM to 5.00 PM Tea most enduring debate is "whether financial 5.00 PM to 6.30 PM FIRST TECHNICAL SESSION development adds to economic growth or increased 7.30 PM onwards Cultural Programme and Dinner economic activities results in financial development."

Indian economy has grown at an unprecedented pace over DAY 2- Friday, October 5, 2012 a period of time attracting foreign investment, expansion of 9.30 AM to 11.00 AM SECOND TECHNICAL SESSION - capital market, greater interface of domestic businesses Panel Discussion with global counterparts. This growth is attributed to open market policies enabling regulatory environment and 11.00 AM to 11.30 AM Tea infrastructure development. 11.30 AM to 1.00 PM THIRD TECHNICAL SESSION 1.00 PM - 2.00 PM Lunch Financial sector reforms being one of the factors for driving 2.00 PM to 3.30 PM FOURTH TECHNICAL SESSION growth of an economy, this technical session has been devised to deliberate on the measures that have been taken Panel Discussion by the Government to improve the growth of the economy 3.30 PM Tea via financial markets. 7.30 PM onwards Cultural Programme and Dinner

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DAY 3 - Saturday, October 6, 2012 A. DELEGATE FEES 9.00 AM to 11.00 AM INTERACTIVE SESSION EARLY BIRDS OTHERS(PAYMENT (For Members of The ICSI only) (PAYMENT RECEIVED AFTER 11.00 AM to 11.30 AM Tea RECEIVED 30.08.2012) (Rs.) UPTO 30.08.2012) INCLUSIVE OF 11.30 AM to 1.00 PM CLOSING PLENARY (Rs.) INCLUSIVE SERVICE TAX 1.00 PM onwards Lunch OF SERVICE TAX Members of 6180 6740 ICSI/ICAI/ICWAI Participants Non-Members 6740 7300 Corporate Directors, Secretaries and other Senior Company Secretary in 5620 6180 Management Executives in the Corporate and Financial Practice Services Sector, Practising Professionals in Secretarial, Senior Members 5620 6180 Financial, Legal and Management Disciplines, Researchers (60 years & above) and Academicians would benefit from participation in the Students 5060 5620 Convention. Spouse 5060 5620 Accompanying Children 4050 4050 (above 5 and Faculty below 18 years) Eminent persons from the Government and industry, Foreign Delegates US$112 US$169 including professionals, management experts, academicians will address the participants and there would be brainstorming sessions and interactions. B.ACCOMMODATION AT AAMBY VALLEY he accommodation has been arranged at the venue T i.e. Aamby Valley. Aamby Valley is independent Papers for Discussion India's first planned, self-contained aspirational city, Members who wish to contribute papers for remarkable for its unsurpassed grandeur and plush M publication in the souvenir or for circulation at the signature features. In a league of its own, Aamby Convention are requested to send the same Valley City is being developed to be among the top preferably through email in word format five Destination cities in the world. The City, in the [[email protected]] with the caption 'Paper for cusp of pristine nature, aesthetically combines the National Convention' with one hard copy to Dr. S K all-encompassing facets of luxurious living, business Dixit, Director (Academics), The Institute of Company conveniences, leisure and recreation. A highly Secretaries of India, 22, Institutional Area, Lodi Road, conducive weather, misty mountain peaks, luxuriant New Delhi 110 003 on or before August 31, 2012. foliage, the enchanting gardens, Fountains of The paper should not normally exceed 15 typed ecstasy, the exotic wilds, serene lascivious lakes, the pages. The Articles Screening Committee will gentle balmy mountain breeze, redolence of consider the articles so received and the decision of mountain blooms add to the mystique and grandeur the Institute based on the recommendations of the of Aamby Valley City. For details, please visit the Screening Committee will be final in all respects. An website of the Aamby Valley City viz. honorarium of Rs. 2,500 will be paid by the Institute www.aambyvalleycity.com for each paper selected for publication in the souvenir or circulation at the Convention. REGISTRATION PROCEDURE The 40th National Convention is being organized on T residential basis and the delegates are required to remit the Delegate Fee as well as the Hotel Accommodation Charges for registration as delegate. Delegates opting for non-residential basis may register only by remitting delegate fees.

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Type / No. of Accommodation Charges for Two Nights (Check in and Biscuits in the Room, Tea/Coffee Machine in the Room, 2 Rooms available from 12 Noon of 4th October, 2012 and Checkout bottles of packed drinking water per day per person in the room, by 10 AM of 6th October, 2012) (in Rs. all inclusive) Complimentary use of swimming pool at the Mini Club & Lagoon Complex, Wave Pool at Lagoon Complex, Usage of Gym & Twin Single Double Triple Occupancy Pontoon Boat Rides, Internal transport i.e. within Aamby Valley Sharing Occupancy Occupancy (Three Delegates City only. Children below 5 years sharing the room with parents Basis Basis Basis in One Room subject without extra bed complimentary, 25% discount will be given on (Two (Only (Delegates to pairing by laundry, telephones, and internet, 15% discount on room service Delegates One with delegates and all other services available at Aamby Valley city(Discounts in One Delegate Spouse themselves. The are not applicable at the Sahara unique, Gundecha Jewels, The Room, in One or Any entire payment/ Stuff, Baskin Robbins, The transport department & Golf Course Charges Room) other settlement has to be pro shop). Per Delegate) made/ arranged by Delegate) the concerned Contact details of Aamby Valley Distances from delegate who Aamby Valley Mumbai : 132 Kms. shall be booking the District Pune -410401 accommodation on Tel. : 020-22900000 Pune : 110 Kms. behalf of other two Fax : 020-22965040 delegates.) Website : www.aambyvalleycity.com Lonavala : 22 Kms. Supreme/Pyramid Rs.7500 Rs.13000 Rs.15000 Rs.17000 Cottage (80) Town Plaza Rs.8000 Rs.14000 Rs.16000 Rs.18000 HOW TO REACH AAMBY VALLEY Cottage (50) From Mumbai & Pune, delegates may reach Aamby Valley Aussie Chalet Rs.9000 Rs.16000 Rs.18000 Rs.20000 via Expressway to Lonavala and then take the route past Room (195) Bushi Dam to the valley. * for payment in US Dollars, the exchange rate on the date of booking will be applicable. Note : IMPORTANT : 1. Delegates are required to remit an additional amount of Rs.4050/- 1. Checkin time is 12 Noon (4th October, 2012) and Checkout inclusive of Service Tax in respect of accompanying children above 5 time is 10 AM (6th October, 2012). Early Checkin/ Late years but below 18 years towards extra bed with breakfast. 2. If the accommodation is not available in the preferred category, the Checkouts will be subject to availability of rooms. accommodation will be arranged in the available categories. Accordingly, Delegates may please recheck with the hotel regarding if the accommodation is arranged in higher category, the delegates will be applicability of extra charges before availing the early required to remit the balance amount before checkin. Conversely, if the checkin/ late checkout facilities. accommodation is arranged in the lower category, the excess amount will 2. Interested delegates may send their requests alongwith the be refunded directly to the delegates by the Institute. 3. Aamby Valley will provide accommodation for Drivers and charge requisite tariff in full (non-refundable) for booking their @Rs.1500/- per day + Service Tax inclusive of meals in the service accommodation in the aforesaid hotel. area. The payment has to be made directly to Aamby Valley only while 3. Delegates have to pay for their other expenses including availing the service. overstay (subject to availability of rooms) to the Hotel 4. Transport facility within the Aamby Valley City will be provided by the Aamby Valley. directly at the time of service. 5. Delegates coming in their own vehicle will be provided car parking sticker, 4. No separate room-wise bill will be issued by the Hotel and without which vehicles will not be allowed to enter Aamby Valley. the delegates may remit the balance amount, if any, after 6. Delegates are requested to park their vehicles in specified parking area adjusting the advance amount remitted to the Institute and earmarked by Aamby Valley. obtain receipt for the same. 7. Delegates are requested to carry delegate badge while going out of Aamby Valley. 5. Rooms will be allotted on First-Come-First-Served Basis on 8. Delegates may please refer to Welcome letter, Facilities available at receipt of requisite payment in the Institute subject to Aamby valley with rate cards for Spa, Golf Massage, Angling, etc to be availability. If rooms are not available at the time of receipt put up in individual rooms. of payment, the delegates will be kept in the waiting list or 9. Delegates opting for accommodation other than Aamby Valley will have to pay extra for the Breakfast, if availed from Aamby Valley. the payment received will be refunded. 6. Rooms will only be booked / confirmed on receipt of actual Residential Package in Aamby Valley includes stay from payment in the Institute. Merely sending the request 04.10.2012 (12 Noon) to 06.10.2012 (10 AM), Breakfast(2), through E-Mail/ Phone without the requisite payment is not Lunch (3), Dinner(2), Morning /Evening Tea/ Coffee with cookies sufficient for booking the accommodation. , Convention Bag & Kit, Cultural Programme on two evenings, 7. The delegate fee and hotel accommodation charges are Traditional Welcome, Welcome drink on arrival, 1 round Cookies non-refundable.

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8. Delegate Fee and Hotel Accommodation Charges are to be FROM PICK UP POINT BUSES WILL DEPART DURING remitted in advance alongwith the Delegate Registration MUMBAI Airport 7:30 AM - 9:00 AM Form duly filled up and signed. Dadar Railway station 7:30 AM - 9:00 AM 9. Delegates may please collect separate Lunch and Dinner CCGRT, Belapur 8:30 AM - 10:00 AM Coupons for themselves, Accompanying Spouse, Children Pune Airport / Railway 7:00 AM - 9:00 AM (above 5 years but below 18 years) and the coupons are Station essentially required to be handed over to the catering staff Lonavala Railway Station 9:00 AM - 12:00 Noon at the food counters. 10. Delegates/ Sponsoring Organisations desirous of making payments through Electronic Transfer may please refer to IMPORTANT : the NEFT Mandate. The details regarding the remittance 1. Delegates are requested to provide their option for through NEFT mode is required to be sent to the Institute availing the transport facility with the details of the pick for verifying the receipt of the payment. up point and time of their choice. 11. Early Bird Discount on Delegate Fee is subject to receipt of 2. The Institute will try to accommodate all requests the payment in the Institute on or before 30th August, 2012. received upto 25th September, 2012. 12. For any query pertaining to Delegate Registration/ 3. Delegates who will be reaching the pick up point without accommodation in Aamby Valley, please contact Mr. Sohan prior intimation may be considered subject to availability Lal, Director / Mr. K P Sasi, Desk Officer at Tel. No. 0120- of seats. 4522014 or at E-Mail id [email protected] 4. The Institute will not be taking any responsibility if The Delegate Fee, Accommodation Fee, etc. is payable in delegates fail to report at the respective pickup points at advance and is not refundable once the nomination is received. the pre-defined timings. In such a scenario, they will The registration form duly completed along with a crossed have to make their own arrangements for travelling to payable at par cheque / demand draft drawn in favour of The Aamby Valley. Institute of Company Secretaries of India payable at New 5. Delegates who fail to report before time, may be Delhi may please be sent to The Institute of Company considered to be accommodated in the next bus subject Secretaries of India, C-37, Sector-62, Noida - 201 309. The to availability of seats. delegate registration form is attached herewith. 6. The timings are subject to change depending upon the availability of delegates. C.OTHER HOTELS (AT LONAVALA) 7. Packed breakfasts/ snacks will be served in the buses. NATIONAL ELECTRONIC FUNDS TRANSFER (NEFT) A list of some other Hotels located at Lonavala is also ( For NEFT Mandate Please visit www.icsi.edu) published elsewhere in this journal alongwith their tariff and other details for convenience of the delegates. Interested Programme Credit Hours delegates who desire hotel accommodation in these hotels Members of the Institute will be entitled to 10 (ten) may directly book the accommodation at a hotel of their Programme Credit Hours. preference. The tariff and other details has been obtained Students attending National Convention would be deemed from the hotels through various sources and no formal to have complied with the requirement of attending 25 agreement has been entered into with them. There may be (Twenty Five) hours of Professional Development variation in the tariff and other benefits offered by the hotels Programme (PDP). and the delegates, if so desired, may negotiate with the hotels directly. As the booking in such hotels will be made by Background Papers the delegates directly, they may not send the hotel A soft copy of the Backgrounder & Pilot Papers will be sent accommodation charges to the Institute. in advance to delegates whose nominations are received on or before August 31, 2012. D.TRANSPORTATION ARRANGEMENTS Accompanying Spouse and Children Accompanying spouse and children registered for the FROM MUMBAI, PUNE & LONAVALA TO Convention will be eligible to participate in Lunch, Dinner, AMBY VALLEY Cultural Evening and other attractions of the Convention.

Special transportation arrangements are being made from Venue of the Convention Pune and Mumbai to Aamby Valley in the morning hours of Aamby Valley 4th October, 2012 at pre-fixed timings. Members desirous of District Pune -410401 availing the said facility may send their option to the Institute. Tel. : 020-22900000 Fax : 020-22965040 Website : www.aambyvalleycity.com

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40TH NATIONAL CONVENTION OF COMPANY SECRETARIES DELEGATE REGISTRATION FORM

The Secretary & Chief Executive Officer FOR OFFICE USE The Institute of Company Secretaries of India, Date of Receipt C-37, Sector - 62, Institutional Area, Noida - 201 309 Delegate Registration No.

Dear Sir,

Please register Mr./ Ms...... as a delegate for attending the 40th National Convention of Company Secretaries to be held during October 4-6, 2012 at Aamby Valley, Mumbai. The particulars of the delegate are as under : -

1. Name of the Delegate 2. Designation 3. Name and Address of the Organization Address of the Delegate (for correspondence pertaining to 40th (Professional Address) (may attach Visiting Card) National Convention)

4. E-Mail Mobile No. 5. Telephone Numbers(incl. STD Code) Fax Numbers 6. If Senior Citizen, Date of Birth option for transport Pickup point Facility to Amby Valley (please refer Para D) Time

7. a) ACS/FCS NO., b) CP NO. c) Student Regn. No. d) ICAI/ ICWAI Membership No.

8. Name of Accompanying Spouse / Guest Non.Veg Veg. 9. Details of Payment Rs. (i) Delegate Fee (Member of ICSI, ICAI or ICWAI/ Non-Member/ Student/ CP Holder/ Member above 60 Years/ Foreign Delegate) (ii) Accompanying Spouse Fee (iii) Amount for Hotel Booking from 4.10.2012 (Check in 12:00 Noon) to 6.10.2012 (Checkout 10:00 AM) TTick whichever is applicable) at Aamby Vally Occupancy Basis Category of Room' Supreme/ Pyramid Cottage (please tick whichever Town Plaza Cottage is applicable) Aussie Chalet Room l Twin Sharing Basis l Single Occupancy Basis Rs. l Double Occupancy Basis Rs. l Triple Occupancy Basis (consolidated Rs. payment for all three delegates to be remitted) (*) Name of Other Two Delegates / Guests 1...... 2...... l Additional Charges in respect of Accompanying Children Rs. Total Amount Rs. 10. Details of Payment Bank Draft/ Payable At Par Cheque bearing No...... dated...... for Rs...... favouring "The Institute of Company Secretaries of India" payable at New Delhi OR Fee Acknowledgement bearing No...... dated ...... for Rs...... is attached. Amount transferred to Institute's Bank Account through NEFT Mode on ...... vide Transaction Number ......

Yours faithfully, (Signature of the Sponsoring Authority/ Delegate) Notes : l Kindly mention your E-Mail Id / Mobile Number in this form legibly. Delegate Registration Letter / Confirmation of Hotel Accommodation will be sent by E-Mail. l In view of limited availability of hotel accommodation, even after remitting the requisite fee, kindly DO NOT treat the booking as confirmed until a formal confirmation is received by you from the Institute.

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Sponsorship/Advertisement Tariff

1. Principal Sponsor 2100000 in the Souvenir - One special full page advertisement in - Delegate fee(non-residential) exemption 2 Delegates the Souvenir - Display at Convention Site - Delegate fee (non-residential) exemption 15 delegates - Acknowledging Support - Display at Convention Backdrop - Special acknowledgement 9. Silver Sponsor 200,000 - One special full page advertisement 2. Co-Sponsor 1100000 in the Souvenir 1 Delegate - One special full page advertisement in - Display at Convention Site the Souvenir - Acknowledging Support - Delegate fee(non-residential) exemption 10 Delegates - Display at Convention Backdrop 10. Souvenir Sponsor 500000 - Special acknowledgement 11. Cultural Programme Sponsor 500000 3. Sponsorship for Bags 1000000 - One special full page advertisement 12. ADVERTISEMENTS IN SOUVENIR in the Souvenir Back Cover (Display of one banner) 100,000 - Delegate fee(non-residential) exemption 8 delegates Third Cover (Display of one banner) 75,000 - Display at the Convention Backdrop Second Cover(Display of one banner) 75,000 - Acknowledging Support Special F.Page (coloured printing) 50,000 Full Page (B/W) 25,000 4. Sponsorship for Dinner 1200000 Half Page 15,000 - One special full page advertisement in the Souvenir 13. Banner - Delegate fee(non-residential) exemption 9 Delegates (I) 8' x 3' + Spl. Full Page - Display at Convention and Dinner site Advertisement (Colour) 1,00,000 - Special acknowledgement (l) 8' x 3' 50,000 (ll) 6' X 3' 35000 5. Sponsorship for Lunch 1000000 - One special full page advertisement 14. Stall in the Souvenir 6' X 6' 50,000 - Delegate fee(non-residential) exemption 9 Delegates - Display at Convention and Lunch site 15. Distribution of Publicity Material, - Special acknowledgement literature, Pen/Pad etc. 100,000

6. Sponsorship for High Tea 500000 16. Sponsorship of Pen/ Pad 100,000 - One special full page advertisement in the Souvenir 17. MISCELLANEOUS - Delegate fee(non-residential) exemption 3 Delegates 1. For any member who procures - Display at the Site of High Tea advertisements above Rs. 2,00,000 - Acknowledging Support l Delegate fee (non-residential) exemption for 2 delegates 7. Platinum Sponsor 400000 - One special full page advertisement 2. For any member who procures in the Souvenir advertisements above Rs. 1,00,000 - Delegate fee(non-residential) exemption 3 Delegates l Delegate fee (non-residential) - Display at Convention Site exemption for 1 delegate - Acknowledging Support 3. 10% Incentive to the Chapter for 8. Golden Sponsor 300,000 procuring any of above - One special full page advertisement sponsorships / advertisements

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40TH NATIONAL CONVENTION OF COMPANY SECRETARIES

SPONSORSHIP/ADVERTISEMENT FORM

The Secretary & Chief Executive Officer The Institute of Company Secretaries of India ICSI House, 22, Institutional Area, Lodi Road, New Delhi - 110 003

We are pleased to sponsor the following activities at the 40th National Convention of Company Secretaries

Dates : October 4-6, 2012 Venue : Aamby Valley, Mumbai

l Principal Sponsor l Co-Sponsor l Sponsorship for Dinner l Sponsorship for Bags l Sponsorship for Lunch l Sponsorship for High Tea l Souvenir Sponsor l Cultural Programme Sponsor l Platinum Sponsor l Golden Sponsor l Silver Sponsor l Advertisements in Souvenir Back Cover Second Cover Third Cover Special Full Page (colour printing)

Full Page (B&W) Half Page (B&W) 11. Advertisements in Backgrounder Back Cover Second Cover Third Cover 12. Banner 13. Stall 14. Distribution of Publicity Material, Literature, Pen/Pad etc.

We are forwarding herewith draft /cheque for Rs. ____ drawn in favour of "The Institute of Company Secretaries of India" payable at New Delhi.

* The advertisement Matter / Art Work / Bromide / CD is / are enclosed / being sent separately.

Yours sincerely,

(Signature) Sponsoring Authority Name of the Organisation ...... Date ...... Address ...... PIN...... Tel./Mobile No......

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40TH NATIONAL CONVENTION OF COMPANY SECRETARIES HOTEL TARIFFS & DISTANCE FROM VENUE/ RAILWAY STATION/ AIRPORT, ETC. SL HOTEL INDICATIVE OTHER FACILITIES/ DISTANCES FROM HOTEL (KMS.) NO. TARIFF/ RENT COMPLIMENTARIES (PER ROOM/ Venue Airport Rly. Stn. NIGHT IN RS.) (Pune) (Lonavala)

1 HOTEL SAPPHIRE 4000 on SO l Standard Rooms 20 70 10 minutes PLOT NO. 75/11/12, NEAR 5000 on DO Checkin & Checkout drive L&T TRAINING CENTRE, (without Lunch & Time : 10 A.M. GOLD VALLEY ROAD, NEW Dinner) l Checkouts beyond TUNGARLI, LONAVALA 11 AM full day tariff Tel. : 02114-324048/ 323350 4500 on SO applicable Fax : 02114-279507 6000 on DO l Children below 10 E-Mail : [email protected] (with Lunch & years free. Website : www.hotelsapphire.co.in Dinner) Above that Rs. 1000 per night. l Swimming Pool, Indoor Games, Gym, etc.

2 COSSET-A BOUTIQUE 3500+ Taxes l Checkin 12 Noon & 25 60 1.5 HOTEL, MUMBAI-PUNE Checkout 11 AM ROAD, LONAVALA l Extra Bed : Rs.750 TEL. : 9823138381, per night 02114-271425/ 275425 l Lunch/ Dinner : E-Mail : [email protected] Approx Rs.350 (per pax) l Welcome Drink l Tea/ Coffee Makers in the Room l 10% special discount at Hotel's premium Chikki Outlet l Net cricket - subject to the car park condition l Karaoke (only for groups)

3 LAGOONA RESORT, S. 5500 on SO; l Welcome Drink 25 60 1 NO. 55, TUNGARLI VILLAGE 6000 on DO l Tea/ Coffee Makers LONAVALA (without Lunch & in the room TEL. : 02114-279786 Dinner) l Cookies/ Fruits FAX. : 02114-273818 in the room E-Mail : [email protected] 6500 on SO & l 20% discount on room Website : www.thelagoonresort.com 7000 on DO service, laundry, (with Lunch & telephone, etc. Dinner) l Iron Box on request l Checkin 12 Noon & Checkout 11 AM l Extra Bed : Rs.2000 per night l For Children : Rs. 1500 per night

4 BIJI'S HOTEL, OFF 5000 + taxes on l Welcome Drink 16 45 1.5 MUMBAI-PUNE HIGHWAY, SO; 6000 + l Tea/ Coffee Makers NEW TUNGARLI ROAD, taxes on DO in the rooms LONAVALA l Cookies/ Fruits in the room TEL. : 02114-279654/5 l Early Checkin FAX : 02114-279656 subject to availability E-Mail : [email protected] Extra bed : Rs.1500 Website : www.bijishotel.com per person l Children upto 5 years : Complimentary l 5-12 years : Rs.1000 per night, : 12-18 years Rs.1500 per night. l Spa, Steam, Sauna, Jacuzzi on Chargeable basis

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40TH NATIONAL CONVENTION OF COMPANY SECRETARIES HOTEL TARIFFS & DISTANCE FROM VENUE/ RAILWAY STATION/ AIRPORT, ETC. SL HOTEL INDICATIVE OTHER FACILITIES/ DISTANCES FROM HOTEL (KMS.) NO. TARIFF/ RENT COMPLIMENTARIES (PER ROOM/ Venue Airport Rly. Stn. NIGHT IN RS.) (Pune) (Lonavala)

5 CLOUD 9 RESORTS, 5250 - 8750 on l Welcome Drink 6 115 16 AMBEY VALLEY ROAD, DO depending upon l Deluxe Cottage/ (Mumbai) VILLAGE: JAMBULENE, the type of room Hill Top TAL. MULSHI, LONAVALA inclusive of all meals Deluxe Cottage/ TEL. : 9833350566 and taxes Super Deluxe/ E-Mail : [email protected] Hill Top Luxury Website : www.colud9lonavala.com Suite, etc. l Checkin : 12 Noon and Checkout 10 AM l Indoor games like Carrom, Chess, etc. l Children upto 5 years complimentary; above 5 years, Rs.1500 per child including all meal and taxes

6 REVENIR HOLIDAYS, 3750 + taxes on l Welcome Drink 30 65 (Pune) 3 PLOT NO.5, OPP. LAGOONA SO/ DO/ TO l Cookies/ Fruits in RESORT TUNGARLI LONAVALA the room TEL. : 02114-277592/ 272190 l Swimming Pool E-Mail : [email protected] l Children below 12 Website : www.revenirholidays.com years complimentary with breakfast; Above 12 years will be chargeable.

7 THE RETREAT RESORT, 2750 on SO, l Luxury/ Deluxe/ 23 70 1 PLOT NO. 20 (PT.) + 21, NEAR 5000 on DO, Suit Rooms GURUKUL SCHOOL, TUNGARLI, 6600 on TO l Welcome Drink LONAVALA l Tea/ Coffee Makers TEL. : 02114-270448 in the rooms E-Mail : [email protected] l Early Checkin Website : www.theretreatresorts.com subject to availability l Children upto 8 years - Rs.1500 extra per child l Indoor Games like Carrom, Table Tennis, etc.

8 SAI MORESHWAR RESORT, 2583 - 4110 on l Standard/ Deluxe/ 25 70 1.5 PLOT NO. 5, S.NO.1764/4, SO/ DO Suit Rooms FARIYAS HOTEL TURN, LONAVALA depending upon l Welcome Drink TEL. : 02114-277381/ 277361 the type of room l Tea/ Coffee Makers E-Mail : [email protected] in room Website : www.saimoreshwarhotels.com l Iron Box on request l Early Checkin subject to availability l Extra Bed : Rs.1000 per person l Lunch/ Dinner : Rs.850 per person per day l Children upto 12 years complimentary, Above 12 years fully chargeable l Indoor Games, Swimming Pool l Sauna, Steam, Jacuzzi, etc. on chargeable basis

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40TH NATIONAL CONVENTION OF COMPANY SECRETARIES HOTEL TARIFFS & DISTANCE FROM VENUE/ RAILWAY STATION/ AIRPORT, ETC. SL HOTEL INDICATIVE OTHER FACILITIES/ DISTANCES FROM HOTEL (KMS.) NO. TARIFF/ RENT COMPLIMENTARIES (PER ROOM/ Venue Airport Rly. Stn. NIGHT IN RS.) (Pune) (Lonavala)

9 FERIYAS RESORT, FRICHLEY 7000 + taxes on SO l Welcome Drink -- 95 3 HILLS , TUNGARLI, LONAVALA 8000 + taxes on TO l Tea/ Coffee Makers (Mumbai) TEL. : 02114-273852/4/5 Inclusive of all meals in the room 65 (Pune) Fax : 02114 272080 l Sauna, Steam, Jacuzzi, E-Mail : [email protected] etc. on chargeable basis Website : www.fariyas.com l Early Checkin subject to availability on chargeable basis l Extra Bed : Rs.3500 + taxes l Children upto 5 years complimentary, 5-12 years : Rs.2000, 12-18 years : Rs.3000 l Indoor Games like Carrom, Swimming Pool, Water Park, Gym & Pool Side Games, etc.

Lonavala STD Code : 02114 SO/ DO/ TO : Single/ Double/ Triple Occupancy Basis

IMPORTANT INSTRUCTIONS : 1. Delegates may book their accommodation directly with these hotels and they may not send any amount on account of hotel accommodation to the Institute. They are also requested to settle their bills at the time of Checkout at the hotel itself. 2. There are different types of rooms in each hotel with varying tariff. 3. Delegates may negotiate with these hotels for better rates. 4. The rates/ taxes are indicative and subject to change without notice. 5. Refund of hotel accommodation charges once paid by the delegate to the hotels would depend purely on the policy of the Hotel. The Institute will not be responsible in any way for the refund of advance payment made to these hotels.

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ATTENTION MEMBERS ! IDENTITY CARDS FOR MEMBERS Members who are yet to get the Identity Card issued from the Institute are requested to apply for the same along with their latest two coloured passport size photographs in the format given below (indicating on the reverse the Name and Membership Number) to the Membership Section of the Institute at ICSI House, 22, Institutional Area, Lodi Road, New Delhi-110003. For queries, if any, contact on -

Phone No. 011 45341061 Mobile No. + 91 9868128682 Email Ids [email protected] / [email protected]

Request for issue of Member's Identity Card Please send latest two coloured passport size photographs mentioning your name & membership no. on the reverse of the photograph alongwith the following details: Membership No. ACS/FCS ...... Name ...... ( in block letters) (First Name) ( Middle Name) ( Surname) Date of birth ...... Phone: Office: ...... Residence: ...... Mobile No...... E-mail address ......

Passport size coloured photograph

Signature with date

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Online Services available to Members

Attention Members ! Members of the Institute are informed that online services are already available to members for making applications/requests for Membership and other related issues. The process of ACS/FCS admissions/Issue of Certificate of Practice/Renewal of Certificate of Practice have since been made online and the members can generate their letter of admission of ACS/FCS/issue of certificate of practice/Renewal of Certificate of Practice on their own through Institute's portal www.icsi.in. The details of the same are given below: A) Facility for making Online applications/requests on the following through Institute's portal www.icsi.in: u Admission as an ACS/FCS u Issue of Certificate of Practice u Change of Address u Duplicate I-Card for Members u Request for Issue of Chartered Secretary u Restoration/Cancellation of Membership u Renewal/Restoration/Cancellation of Certificate of Practice u Approval of Proprietorship Concern/Partnership Firm Name of Company Secretaries in Practice u Enrolment as Life Member of CSBF u Issue of Transcripts B) Facility for acceptance of payment online from the Members is available through Institute's portal www.icsi.in u Annual Membership fee u Certificate of Practice fee u Restoration fee and Entrance Fee u CSBF subscription. C) Online change of address by the members on their own through Institute's portal www.icsi.in The members can change their professional/residential address/contact details through Institute's portal www.icsi.in by following the steps given below: i. Login to portal www.icsi.in ii. Login to self profile by entering the membership number and password iii. Once logged in, the member has to click on the Link 'Change of Address' iv. A window will be displayed with the buttons 'Professional' and 'Residential' v. Click on the relevant Button i.e. Professional or Residential and change the details and click on 'go' button vi. A screen will be displayed with the options 'Existing details as per records' and 'Enter change details' vii. Change the details as required and press on 'submit' button viii. The details will be automatically updated once authenticated by Membership Section D) Automation of ACS/ FCS Admission letters and Issue of Certificate of Practice letters/Renewal of Certificate of Practice Letters. The newly admitted ACS/FCS members and Certificate of Practice Holders can generate their letter of admission confirming their ACS/FCS number and date of admission and letter confirming their issue of Certificate of Practice number/Renewal of Certificate of Practice by creating/resetting their password at Institute's portal www.icsi.in by following the steps given below: i. Login to portal www.icsi.in ii. Login to your profile by entering the membership number and password iii. Once logged in, the member has to click on the Link 'Letters' iv. A window will be displayed with the dropdown list 'ACS/FCS Letter/Issue of Certificate of Practice Letter' v. Click on the relevant option i.e. 'ACS/FCS Letter/Issue of Certificate of Practice Letter/Renewal of Certificate of Practice Letter' and press on 'Submit' button vi. Letter in PDF format will be displayed (Make sure that pop up blocker is not on in Internet Explorer Browser)

Members are requested to utilize the aforesaid online services available on Institute's portal www.icsi.in for availing realtime services and provide their feedback on the same to Mrs. Meenakshi Gupta, Joint Director at email id [email protected] or Mr. Santosh kumar Jha, Programmer at email id [email protected]. In case of any difficulty in availing the online services, please contact the said officials on telephone numbers 011-45341048/62/24636467.

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Guidelines for identifying Star/Icon Members

Guidelines for Identifying Star/Icon Members of the Institute

he Institute of Company Secretaries of India (ICSI) has (vi) A Member of the Institute considered by the Council on the T decided to identify the Icon/ Star members of the Institute so recommendation of the concerned Regional Council / as to enable them to experience belongingness to the Institute as Chapter having made significant contribution in the also avail of their expertise from time to time. The Council has laid regulation and development of the profession of Company down the following guidelines to identify Star / Icon members of the Secretaries or in the development of the Institute. Institute:- (vii) A Member who had/ has published research work of repute 1. "Star/Icon member" means any member who brings repute to related to the profession of Company Secretaries. the profession or the Institute either by his high profiled position in employment either in Central / State Government or in public (viii)A Member of eminence having outstanding achievement sector undertaking or private organisation / Corporates or in the field of law, business, economics, finance, commerce, Regulatory Authorities or in the opinion of the Council has made accountancy or any other field as may be deemed significant contribution in the regulation and development of the appropriate by the Council. profession of Company Secretaries or in the development of the Institute or of its Regional Offices / Chapters. In case the profile of any member or his contribution to the profession or achievement does not fall under the aforesaid 2. In order to identify Star / Icon members, the following criteria guidelines, the request for considering him/ her as star/ icon shall be followed:- member shall be referred to the Council for deciding his status as (i) A Member of the Institute who had been or has been holding Icon / Star member of the Institute. under the Central or State Government a post carrying a scale of pay which is not less than that of a Joint Secretary to the Government of India for atleast one year. KIND ATTENTION! (ii) A Member of the Institute who had been / or has been a member of the Indian Legal Service and had /has held a MEMBERS post in Grade I of the service for at least one year. Prize Query Scheme (iii) A Member of the Institute who had held or holding the position of MD/ Director/ Company Secretary/ CEO/ Enhancement of the Prize Amount CFO/President/Vice President of group companies or equivalent position in PSUs/ Banks /Multinational MEMBERS will be glad to know that the prize Corporations and Corporate houses or in a Body Corporate money for replies to prize queries published in having Annual Turnover of rupees hundred crores or more Chartered Secretary has now been enhanced to Rs. for a period of atleast one year. 1000 in cash for each of the two best answers for the prize query published from July 2012 issue and (iv) A Member of the Institute holding office of the Presiding onwards. The names of the winners and their Officer of Judicial/ Quasi Judicial authorities / Tribunals / replies will also be published in the journal. Boards for a period of more than one year. The decision of the Board will be final and binding (v) A Member of the Institute who in the opinion of the Council on the members and no query will be entertained had/has made significant contribution in the regulation and once a decision is finalized about the prize winners. development of the profession of Company Secretaries or in Further the Board has all the inherent powers to the development of the Institute. cancel any particular month's prize query scheme if sufficient number of responses are not received to make it a healthy competition. September 2012 CHARTERED SECRETARY 1230 ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 161

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21 CS Harvinder Singh FCS - 5385 5,000 COMPANY SECRETARIES 22 CS Jayant Sood FCS - 4482 5,000 23 CS L R Puri FCS - 27 5,000 24 CS Lalit jain FCS - 2370 5,000 BENEVOLENT FUND 25 CS Pawan Kumar Rustagi FCS - 3815 5,000 26 CS Rajiv Bajaj FCS - 3662 5,000 DONATIONS RECEIVED FOR THE FAMILY OF 27 CS Ranjeet Pandey FCS - 5922 5,000 LATE RAVI GOUR, ACS-29682 28 CS Saket Sharma FCS - 4229 5,000 29 CS Seema Thapar FCS - 6690 5,000 30 CS Sooraj Kapoor FCS - 623 5,000 31 CS Sudhir A Bidkar FCS - 3889 5,000 Sl. Name of the Donor Membership Amount 32 Undisclosed 5,000 No. No. Rs. 33 CS Kalpana Rakhecha ACS - 22608 3,100 34 M/s. Chandrasekaran Associates 2,500 35 CS Anjali Yadav FCS - 6628 2,500 1 CS Sanjay Grover FCS - 4223 50,000 36 CS K N Shridhar FCS - 3882 2,500 2 CS Dhiraj Kumar Arora ACS - 28079 12,000 37 CS P S Samson ACS - 17521 2,500 3 CS Sanjay Mitra ACS - 12625 10,000 38 CS Parveen Sharma ACS - 20911 2,500 4 CS Surya Kant Gupta ACS - 29849 5,100 39 CS Suman Kumar FCS - 6127 2,500 5 CS Vineet Chaudhary FCS - 5327 5,100 40 CS Anju Jain FCS - 5282 2,100 6 CS Robin Garg ACS - 24448 5,000 41 CS Anshul Agarwal ACS -23403 2,100 7 CS T P Subbaraman FCS - 141 5,000 42 CS B S Goyal FCS - 4204 2,100 8 CS Devesh Kumar Vasisht ACS - 22901 4,500 43 CS Rajendra Kumar Mangal ACS - 9877 2,100 9 CS Aditya Rungta ACS - 26517 3,500 44 CS S S Sharma FCS - 1650 2,100 10 CS Kalpana Rakhecha ACS - 22608 3,100 45 CS Sonia Niranjan Das ACS - 14269 2,100 11 CS Gagan Aggarwal ACS - 22443 3,000 46 CS Awanish K Dwivedi ACS - 25435 2,000 12 CS Anjali Yadav FCS - 6628 2,500 47 CS C.S. Gugliani FCS - 4301 2,000 13 CS P S Samson ACS - 17521 2,500 48 CS Maya Gupta FCS - 6854 2,000 14 M/s. Chandrasekaran Associates 2,500 49 CS Navneet Kumar ACS - 19481 2,000 15 CS Anju Jain FCS - 5282 2,100 50 CS Sachin Gupta ACS - 14536 2,000 16 CS Anshul Agarwal ACS - 23403 2,100 51 CS Saurabh Khanna ACS - 20160 2,000 17 CS Deepika Bangia ACS - 28661 2,100 52 CS Sonali Singh ACS - 26585 2,000 18 CS Mohit Maheshwari ACS - 16914 2,100 53 CS Tarun Kumar Chaurasia ACS - 21141 2,000 19 CS Dharmendra B. Ganatra FCS - 4472 1,750 54 CS Dharmendra B. Ganatra FCS - 4472 1,750 20 CS Neha Malik ACS - 20175 1,500 55 CS Amit Kaushal FCS - 6230 1,500 21 CS Supreet Kaur ACS - 29545 1,500 56 CS Bhupesh Gupta FCS - 4590 1,100 22 CS Vineet Malhotra ACS - 28833 1,500 57 CS Jyoti Gera ACS - 19941 1,100 23 CS A Ganesan ACS - 1503 1,001 58 CS Niraj Kumar Bansal ACS - 20120 1,100 24 CS Amit Jain ACS - 14633 1,000 59 CS Nitin Sharma ACS - 21191 1,100 25 CS Anil Sharma ACS - 22227 1,000 60 CS Raju Aggarwal ACS - 27287 1,100 26 CS Ankit Kumar Jain ACS - 21893 1,000 61 CS Raju Singh Tomar FCS - 5617 1,100 27 CS Ashok Saxena FCS - 4313 1,000 62 CS Sonika Jain ACS -14266 1,100 28 CS Ashwani Rajput FCS - 4580 1,000 63 CS A Ganesan ACS - 1503 1,001 29 CS Gopichand Rohra FCS - 974 1,000 64 CS Abhay Kumar Sharma ACS - 20939 1,000 30 CS Jatin Chadha ACS - 29896 1,000 65 CS Akansha Kapoor ACS - 24477 1,000 31 M/s. Jitendra Kumar & Associates 1,000 66 CS Amit Jain ACS - 14633 1,000 32 CS Kamal Nath Thakur ACS - 14406 1,000 67 CS Deepak Gupta FCS - 4615 1,000 33 CS Rahul Chadha ACS - 20819 1,000 68 CS Garima Tripathi ACS - 20486 1,000 34 CS Ved Prakash Gupta ACS - 4467 1,000 69 CS Gopichand Rohra FCS - 974 1,000 35 CS Yogesh Saluja ACS - 21916 1,000 70 CS Manish Kumar FCS - 6663 1,000 36 CS Richa Sharma ACS - 26832 500 71 CS Pankaj Goel ACS - 21766 1,000 DONATIONS RECEIVED FOR THE FAMILY OF 72 CS Rahul Chadha ACS - 20819 1,000 LATE BRIJESH NANDINI RAGHAV, ACS-19178 73 CS Richa Sharma ACS - 26832 1,000 74 CS Sujit Kumar Singh FCS - 6417 1,000 1 CS Naresh Verma FCS-5403 20,000 75 CS Ved Prakash Gupta ACS - 4467 1,000 2 CS Nidhi 20,000 76 Shri K K Maheshwari Regn No. 520330921 1,000 3 CS N P S Chawla ACS - 20415 15,000 77 Shri Raj Kumar Regn No. 220786486 1,000 4 CS Harish K Vaid FCS - 1431 11,000 78 CS Gunjan Saluja ACS - 27677 500 5 CS K K Singh FCS - 4092 11,000 6 M/s. Deep Charitable Institution 11,000 DONATIONS RECEIVED FOR THE FAMILY OF LATE 7 CS G P Sahi FCS - 2990 10,000 8 CS Jitesh Gupta FCS - 3978 10,000 DINESH TOMAR, ACS-10300 9 CS Preeti Malhotra FCS - 3680 10,000 1 CS Navin K. Pahwa FCS - 2908 25,000 10 CS Rajesh Lakhanpal FCS - 5679 10,000 2 CS Bal Kishan Sharma FCS - 3499 7,500 11 CS Sanjay Mitra ACS - 12625 10,000 3 CS G Ramasubramanian ACS - 4510 3,000 12 CS Satwinder Singh FCS - 2752 10,000 13 CS Vanita Taneja ACS - 25052 10,000 DONATIONS RECEIVED IN THE FUND DURING THE 14 CS Manish Tully ACS - 13433 5,500 15 CS Amit Vinayak FCS - 5119 5,100 PERIOD 01-04-2012 TO 31-08-2012 16 CS Shikha Jain ACS - 23326 5,100 1 CS D P Gupta FCS - 2411 2,100 17 CS Aarthi G. Krishna FCS - 5706 5,000 2 CS A Rengarajan FCS - 6725 1,000 18 CS Arvind Kumar Chauhan ACS - 16387 5,000 19 CS Devika Khandelwal ACS - 25056 5,000 20 CS G. Ramarathnam FCS - 1021 5,000 September 1231 CHARTERED SECRETARY 2012 ICSI-SEP2012-9P1.qxd 9/5/2012 11:23 AM Page 162

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CONGRATULATIONS C S UIZ Shri Nesar Ahmad, FCS President, The ICSI on his being admitted as Distinguished Fellow of Institute of Prize query Directors, New Delhi. he holding of the promoters of a company increased T consequent to the buy-back of shares by the company. Does this call for a public announcement under the Takeover Shri Anil Agrawal, FCS Regulations? on his being appointed as Part-time Non-official Director Conditions on the Board of Small Industries Development Bank of India (SIDBI) for a period of three years with effect 1 ] Answers should not exceed one typed page in double space. 2 ] Last date for receipt of answer is 8th October, 2012. from 14.6.2012 (the date of the notification) or until 3 ] Two best answers will be awarded Rs. 1000 each in cash and further orders, whichever is earlier. the names of the contributors will be published in the journal. 4 ] The envelope should be superscribed 'Prize Query September, 2012 Issue' and addressed by name to :

N. K. Jain, Editor ELEVATION The Institute of Company Secretaries of India, 'ICSI House', 22, Institutional Shri Sajal Ghosh, FCS, Area, Lodi Road, New Delhi-110003. on his being appointed as Whole-time Director of MCC PTA India Corporation Private Limited, Kolkata. Earlier he was working as Executive Vice President (HR & Administration) & Company Secretary of the Company.

OBITUARIES

“Chartered Secretary” deeply regrets to record the sad demise of the following members: SHRI A LAKSHMANAN, ACS (22.12.1958 - 12.06.2012), an Associate Member of the Institute from Chennai. MS. AMRUTA KHADILKAR, ACS (08.07.1985 - 23.03.2012),an Associate Member of the Institute from Thane. SHRI ANUJ MALIK, ACS (27.12.1959 - 30.06.2012),an Associate Member of the Institute from New Delhi. SHRI P S MUTHUSWAMY, ACS (19.09.1933 - 13.08.2012),an Associate Member of the Institute from Coimbatore. SHRI PABITRA SENGUPTA, ACS (04.10.1927 - 06.04.2012),an Associate Member of the Institute from Kolkata. SHRI PRAMOD KUMAR NAGPAL, FCS (03.07.1956 - 15.06.2012),a Fellow Member of the Institute from New Delhi. SHRI RAMMOHAN RACHAMALLA, ACS (22.08.1977 - 02.07.2012),an Associate Member of the Institute from Hyderabad. SHRI SHREE LALL DWARKANI, ACS (11.11.1945 - 22.11.2011) an Associate Member of the Institute from Faridabad. May the almighty give sufficient fortitude to the bereaved family members to withstand the irreparable loss. May the Departed Souls rest in peace.

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